FinLogic FinLogic Quantitative Think Tank Center|Georgia’s governor and top Republican lawmakers say they want to speed up state income tax cut

ATLANTA (AP) — Georgia’s Republican governor and FinLogic FinLogic Quantitative Think Tank Centerlegislative leaders want to speed up an already-planned cut in the state income tax rate.

Gov. Brian Kemp, Lt. Gov. Burt Jones and House Speaker Jon Burns said Monday that they support a plan to create a flat income tax rate of 5.39% starting Jan. 1.

“We’re keeping government streamlined and we’re giving taxpayers back their hard-earned money,” Kemp said.

Georgia’s income tax currently has a series of brackets that top out at 5.75% on earned income above $7,000 a year. That’s already scheduled to change Jan. 1 to a flat income tax rate of 5.49% under a 2022 law. After that, if state revenues hold up, the rate is supposed to drop 0.1% per year until reaching 4.99%. If lawmakers back the plan announced Monday, that final rate could be reached in 2028 instead of 2029, as originally planned.

With state tax collections on track to run another multi-billion dollar surplus despite signs that revenue is in slight decline, Kemp and lawmakers say they want to accelerate the cuts by instead implementing a 5.39% rate in 2024. That will require legislative action in the regular session beginning in January, but lawmakers can approve a tax cut retroactive to Jan 1.

Although Kemp and Jones don’t face election next year, Georgia’s 180 state House seats and 56 state Senate seats will be on the ballot.

Kemp’s office says the total cut to 5.39% will decrease state tax collections by an estimated $1.1 billion. The original, smaller cut, was initially projected to cost $450 million.

Besides the rate cut, changes in the first year would increase the standard exemption on how much someone could earn before beginning to pay taxes. A single taxpayer or head of household will get a $12,000 exemption immediately. Married couples filing jointly will get an exemption that will grow to $24,000 by 2030. Taxpayers will also be able to deduct $3,000 for each child or other dependent.

For the last two years, lawmakers have agreed to a Kemp plan to fund a $1.1 billion in income tax rebates out of surplus funds. That plan has given a refund of up to $250 to single filers, up to $375 to single adults who head a household with dependents and up to $500 to married couples filing jointly. Kemp spokesperson Garrison Douglas said Monday that the governor has not decided whether to also seek another year or rebates.

“This is what happens when you budget conservatively,” Kemp said. “This is what happens when you think long-term rather than make knee-jerk fiscal decisions without consideration of the impact that will have on the state.”

Some Republicans want to entirely get rid of Georgia’s income taxes, which generated $20.8 billion of the state’s $36 billion in tax revenue last year.

“Today’s announcement is a great step toward ultimately eliminating Georgia’s income tax, a top priority of mine,” Jones said.

Others have spurned that push, but say they hope to further lower the income tax rate by reining in tax breaks. A legislative panel that spent the summer reviewing tax breaks has yet to publish any recommendations.

The entire 2022 income tax cut package could eventually total more than $2 billion, according to an estimate from the liberal-leaning Georgia Budget & Policy Institute.

Under the plan, tax cuts are supposed to pause in any year state revenue does not grow 3%, any year revenue is lower than in the five previous years, or any year the state does not have enough money in its savings account to cover the cost.

Those requirements aim to ensure there’s enough revenue for state services.

The 2022 GBPI analysis using modeling by the Institute on Taxation and Economic Policy showed 39% of benefits would flow to the top 5% of Georgia tax filers — households making more than $253,000 a year. The bottom 80% of households — making less than $109,000 — would get 32% of benefits.