Opinion: How Congress could push Georgia’s tax rates lower

Republicans unveiled their long-awaited federal tax-reform bill last week. There’s much work left to do, but it gets the ball rolling on one of the GOP’s last chances to enact a major piece of legislation before next year’s midterm elections.

It should also give renewed momentum to an update of Georgia’s tax code.

If you think the Reagan tax reform of 1986 was a long time ago, that’s a blink of an eye compared to the last major overhaul of Georgia’s individual income tax. According to a 2014 report from Georgia State University, it was in 1937 — 80 years ago — that the “bracket structure (was) established which remains, with minor modifications, in place today.”

When lawmakers have changed that basic structure, they’ve gone in the wrong direction. For example: In 1931, the top rate was 5 percent, and it kicked in at $20,000. That’s more than $310,000 in today’s dollars. Today, Georgians enter the top bracket of 6 percent at $7,000 (single filers) or $10,000 (married couples filing jointly).

But if Congress can close the deal on its tax-reform package, it will put pressure on state lawmakers to lower rates.

It’s simple: Georgia adopts taxpayers’ federal adjusted gross income, with a handful of exceptions, and then allows them to claim either the state’s standard deduction or their federal itemized deductions. So for the most part, your federal taxable income is the same as your state taxable income. (The biggest exception is for retirees, who get a generous income exclusion in Georgia.)

A tax reform that expands federal taxable income will thus lead to a sizable increase in state taxable income as well. Just as the increase justifies rate cuts federally, it demands the same at the state level.

For the moment, state leaders are keeping mum on the new bill. They saw the House GOP push through an Obamacare-repeal bill, only to watch the effort bog down in the Senate, and they haven’t forgotten.

They also have something of a head start because of work done in the 2017 legislative session.

You may recall a similar dynamic played out regarding state tax reform earlier this year. The House passed a bill that reduced Georgia’s unwieldy six brackets to a single, lower rate of 5.4 percent. A later version put the rate at 5.55 percent, which would have amounted to a $180 million tax cut — right at the upper limit of what observers believed Gov. Nathan Deal would sign.

The Senate balked because, according to several people with whom I spoke at the time, a number of senators and Lt. Casey Cagle wanted to pass a larger cut, even if that meant Deal would veto the bill. The bill stalled out. Cagle is now campaigning for governor on a plan to cut income taxes by $100 million.

His GOP opponents promise more, all the way up to eliminating the state income tax. That’s a few bridges too far: The individual income tax is projected to raise almost $11.5 billion in the current fiscal year, or just over half of all state tax revenues.

But given that state lawmakers have already charted a path to 5.4 percent, a federal overhaul could give them the space to go significantly lower. This tax reform could be doubly good for Georgians.

Reader Comments 0

66 comments
breckenridge
breckenridge

Congress could easily decrease the projected 10-year deficit that will result from their tax plan by slamming shut the carried interest loophole.  But this legislation does no such thing.

MiltonD
MiltonD

Rate needs to be a lot less than 5.4%, how about a 0.2% step down every 2 years until we bring the rate to 4%.  Gives the state time to adjust spending and as the state grows the amount of income should make up for the decrease in rate.

breckenridge
breckenridge

No. Those aren't the only ways. Another way to reduce the debt is to increase GDP growth. The more you grow GDP the more tax revenue you have from this ever expanding economic pie. 

And here comes the usual pathetic garbage from the partisan hacks.

The economy is doing just fine.  The idea that it needs stimulating is bogus. And the belief that this tax proposal will goose GDP to 3% is but a fantasy.

Deficit spending is not fine.  It is never fine.  That is a core conservative principle.  Real conservatives gladly embrace that. But the pretenders? As long it's the GOP deficit spending by golly they can justify it.


Pathetic.  Just pathetic.

Doomy
Doomy

"The Iraq war is still costing us, and Afghanistan is heating up. All that expended fuel and ammunition had to be replaced, along with destroyed equipment. And the many severely wounded will cost us for decades."


And the Dimocrat Vietnam war is still costing us plenty. As are WW2, Korea, and many other conflicts and wars.

Starik
Starik

@Doomy Vietnam was Presidents from both parties. There was a purpose to WW2 and Korea.

SGTGrit
SGTGrit

@Starik @Doomy 

Actually, it was JFK and LBJ that got the country into the war in Vietnam. Defending the South from communist aggression was ostensibly the correct thing to do at that time. The war, however, was never fought to decisively win. Westmorland's war of attrition strategy was a failure as was LBJ's fear of broadening the war, which prevented the opportunity to destroy North Vietnam's war efforts in the South. As for Nixon his "peace with honor" was really peace with extreme dishonor.

SGTGrit
SGTGrit

@Starik @Doomy 

As a post script amplification Vietnam was at the time a clear and present danger during the cold war. The Russians and the Chinese were focused on the spread of communist ideology throughout Asia and Europe. Our leadership was justifiably concerned with that spread of influence and that was the driver that got us into the Vietnam war.

Starik
Starik

@SGTGrit @Starik @Doomy Responsibility began with Truman. LBJ was more responsible, but Nixon sabotaged an LBJ peace initiative to get himself elected. LBJ was right to fear broadening the war. We should have allowed the Vietnamese to vote.

SGTGrit
SGTGrit

@Starik @SGTGrit @Doomy 

No LBJ was foolish in his fear and in fact if he had that fear he never should have kept sending American troops into South Vietnam. There was much that could have been done far differently. Westmorland's attrition strategy for openers should have been discarded. At a fairly close count Mao Tse Tung sent close to 500,000 thousand PLA troops to North Vietnam and they integrated into the North Vietnam Army. Many went South and Mao sent even more. Ho had an endless supply of infantry and wasn't concerned with the casualties. We could have easily mitigated the troop advantage by bombing and mining the port cities like Haiphong and others ports in the North. Also bombing the supply routes from the Chinese borders into the North along with destroying North Vietnam's domestic war manufacturing capabilities, which we never did because of Johnson's fears, Additionally, an invasion of Haiphong. i.e. like the Inchon invasion during Korea and the cut off and push North. I could go on and on but you're sadly wrong about LBJ and allowing a vote.

Starik
Starik

@SGTGrit @Starik @Doomy Uh, no. No Chinese soldiers fought in the South. What about Nixon's "strategy" and his sabotage of LBJ's peace effort in '64?

SGTGrit
SGTGrit

@Starik @SGTGrit @Doomy 

Huh...no Chinese soldiers fought in the South? Yes they did and who would have been able to distinguish the difference? They all are ethnic Chinese. LBJ's peace initiative in 64 that's a joke. Ho Chi Minh and Giap weren't interested in a peace agreement. They kicked the French out and they believed correctly that if necessary they could outlast us.

Starik
Starik

@SGTGrit @Starik @Doomy I think we would have noticed if there were any Chinese there. I, for one, could have noticed. In '71 I was at the combined interrogation center in Saigon. Vietnamese are very different ethnically and physically, and their language is entirely different. Where did you pick up the Chinese-combatant idea? .

SGTGrit
SGTGrit

@Starik @SGTGrit @Doomy 

It was documented that China sent two PLA divisions to North Vietnam some reports said it was more like three. They were there mostly to relieve the PAVN of building fortifications and manning anti-aircraft sites some did integrate into NVA units in the South. I've been to China and my wife is ethnic Chinese from Indonesia. There is hardly any discernible physical difference between Chinese from mainland China and ethnic Chinese throughout Indochina. BTW...there were Russian troop advisors in Vietnam and even Cubans. By 1971 the war was winding down as far as our involvement was concerned and everyone knew we were going to quit.

jlrhoya
jlrhoya

Unlike countries, people can change the state they live/work in easily.  Georgia would serve itself best by reducing the state income tax to compete with Florida and Texas.

waitaminute3210
waitaminute3210

@jlrhoya I think that is an excellent idea. It would mean that Georgia would reduce the income tax of those of us who actually pay income tax, while raising the sales and local taxes of those who don't pay income tax. Remember, that money has to be made up somewhere and it's how other states do it.  A step toward fairness. 

MiltonD
MiltonD

@Starik @waitaminute3210 @jlrhoya We need property tax reform.  Far too many people are paying little or nothing in property taxes, yet using all of the services.  I just bought an investment property in Atlanta last week and was shocked to find out that the tax was only $35/year after the owner's homestead exemption.  Every property where someone resides needs to pay at least $,1000/year.  

Doomy
Doomy

"In 1931, the top rate was 5 percent, and it kicked in at $20,000. That’s more than $310,000 in today’s dollars. Today, Georgians enter the top bracket of 6 percent at $7,000 (single filers) or $10,000 (married couples filing jointly)."


Truly a sad statement on how much gubment has intruded into our wallets and our daily lives. The nanny state is hard to roll back once you've created the monster.

Robert1959
Robert1959

 "According to a 2014 report from Georgia State University, it was in 1937 — 80 years ago — that the “bracket structure (was) established which remains, with minor modifications, in place today.”
The Georgia House and Senate over 80 yeas ago was a lot different than it is today.  For example Black & Hispanic Americans were treated as 2nd class citizens.  "Jim Crow" was the law of the land and whites in Georgia fought to keep them "separate but equal".  Minorities were denied access to jobs, housing and credit.  During the "great depression" minorities had no jobs and paid no taxes.  So when you look at tax reform in the state of Georgia tax code there is a lot of work to do.  The question is why did it take so long?  How will Georgia lower the tax rate from 6% to 5%?  Will Georgia Governor Nathan Deal sign or veto any tax reform Bill if the Georgia legislative branch raises the tax from 6% to 7% -8% to adjust for inflation?

Starik
Starik

@Robert1959 Actually, hatred of Hispanics is a much newer phenomenon. Until recently there were too few in Georgia to notice. In the sixties there were no Mexican restaurants at all in Atlanta... I ate my first taco in El Paso after I got drafted in 1969. Blacks were treated much worse than second class before the '60s.

Doomy
Doomy

@Starik @Robert1959


If Hispanics are so hated then why do white folks frequent their restaurants so much, hire them frequently, and celebrate Cinco de Mayo. 


Unfortunately, I think your description of them being hated so much is more projection than anything else. That's very sad. 

Starik
Starik

@Doomy @Starik @Robert1959 You'd have to be deaf, dumb and blind to see how much Hispanics are disliked by Trumpists. Oh, you are a Trumpist, so that explains it.

Doomy
Doomy

@Starik @Doomy @Robert1959


You would have to be deaf, dumb, and blind to make such a ridiculously broad brushed statement with a straight face. 

MiltonD
MiltonD

@Starik @Doomy @Robert1959 Hispanics are not hated in Atlanta but those of us that see the big picture recognize that illegal immigrants have depressed wages for poor Americans and have put an unfair burden on our taxpayers.  

BigGTMike
BigGTMike

 You completely failed to mention the link between the federal standard deduction and the (SIGNIFICANTLY LOWER) Georgia standard deduction.  With the aggregation of the federal standard deduction and federal individual exemption, this is quite punitive to Georgians as things stand depending on where they fall within that range gap. 

breckenridge
breckenridge

Any tax cut legislation that Congress passes must be revenue neutral.  The proposed plan will add $1.5 trillion to the national debt over the next decade. 

TomGaff
TomGaff

@breckenridge OBama doubled the National debt to $20 trillion during his 8 years. Now the GOP wants to increase it by 1.5 trillion over next 10 years. Why did you not complain during OBama's Presidency?

LogicalDude
LogicalDude

@breckenridge Or even revenue enhancing.  Only ways to significantly reduce the deficit and pay down debt is to raise revenues and reduce spending. 

RoadScholar
RoadScholar

@TomGaff @breckenridge How much of that $20 trillion was the result of putting Bush's wars on budget and following thru with policies that fought IS?

JFMcNamara
JFMcNamara

@jhgm63 @TomGaff @breckenridge It's simpler.  Deficit spending by Democrats is bad, but deficit spending by Republicans is good.


Republicans deficit spent on Medicare Part D, Wars, and all kind of stuff.  It's not just tax cuts. 

Kyle_Wingfield
Kyle_Wingfield moderator

@RoadScholar @TomGaff @breckenridge "the result of putting Bush's wars on budget"

I can't believe this inane talking point is still circulating. Debt is debt, whether the spending was "on budget" or off. That goes for Bush and Obama.

RoadScholar
RoadScholar

@Kyle_Wingfield @RoadScholar @TomGaff @breckenridge So "ownership" of the debt does not matter? Funny when President Obama was president the repub response was "OMG" but with Trump more debt is Okay? Are they racists? No just dumb! And don't tell me they will cut $1.5 Trillion from the budget. Fairy tales!

RoadScholar
RoadScholar

@JFMcNamara @jhgm63 @TomGaff @breckenridge Tax the he!! out of incomes over $2M and any bonus over $100K. When will businesses put money into workers rises....other than their own paycheck? Tax businesses who do not pay a living wage the aggregate difference to pay for food stamps and assistance. 

Doomy
Doomy

@LogicalDude @breckenridge


No. Those aren't the only ways. Another way to reduce the debt is to increase GDP growth. The more you grow GDP the more tax revenue you have from this ever expanding economic pie. 

Doomy
Doomy

@Starik @Kyle_Wingfield @RoadScholar @TomGaff @breckenridge


And why shouldn't Obama be blamed? Can't blame his debt on the Iraq war that started under W. After all, we had already begun scaling down troops as far back as 2007 and we were completely pulled out on combat troops in 2011. Try again. 

Doomy
Doomy

@RoadScholar @JFMcNamara @jhgm63 @TomGaff @breckenridge


"Tax businesses who do not pay a living wage the aggregate difference to pay for food stamps and assistance"


You're not much on economics are you, Mr. Scholar. Employers pay according to the supply and demand of the labor market- not according to what you and other progs have arbitrarily decided is a living wage with your number picked out of a hat. 


Furthermore, if you raise that number you will displace many poor and minority workers in favor of whiter, more educated workers. Why do you hate poor and minority people? 


Last, you will drive numerous businesses who use entry level labor out of business- thus not only putting even more people out of work but further diminishing the tax base. Keep doing that and there won't hardly be anyone left to pay the taxes to foot the bill for your welfare state. 

Doomy
Doomy

@jhgm63 @TomGaff @breckenridge


Tax cuts are generally more efficiently spent by the private sector than gubment spending. Anyone who believes the gubment is more efficient in spending a dollar needs to have their head examined. 

RoadScholar
RoadScholar

@LogicalDude @breckenridge If you pay more for wages , that puts more money in circulation and reduces Gvmt's debt to fund social programs so much! Tax businesses that do not pay a living wage to cover governments costs.

Doomy
Doomy

@Starik @Doomy @Kyle_Wingfield @RoadScholar @TomGaff @breckenridge


The Vietnam war is still costing us. Should we blame the Dims for that mess and all that vets still suffering from Agent Orange today? See how ridiculous you sound. Cause I've got several of those clients. And trust me Vietnam on an inflation adjusted basis is far more expensive than Iraq. 

Doomy
Doomy

@RoadScholar @Doomy @JFMcNamara @jhgm63 @TomGaff @breckenridge


Automation has been replacing jobs forever, sir. That's nothing new. Ever heard of the Luddites? Way back in the 1800s they destroyed machinery because they feared machinery replacing human jobs. Same thing happened a century later when at the turn of 1900 there was a panic over the idea that mechanized farming would put most people out of work since we still had huge numbers of people that worked in agriculture. 


This comes around every century where the stupid and the economically illiterate panic about jobs being replaced by machinery. 

Doomy
Doomy

@RoadScholar @Doomy @jhgm63 @TomGaff @breckenridge


The world has a long history of economic growth being spurred by tax cuts. I'll match your Missouri with North Carolina that now has the fastest growing economy in the nation due to tax cuts. You can look worldwide and see that lower taxation economies are healthier and faster growing in general than high tax societies. The evidence is quite overwhelming, sir.