Atlanta – House Speaker David Ralston supports an income tax cut of more than $ 100 million, which is an indication of the recovery of state finances even as government and school budgets are not fully restored to health yet.
House bill 593 would raise the amount of money a person could earn before they start paying government income taxes. The standard single discount would increase from $ 4,600 to $ 5,400, while the standard discount for a married couple might increase from $ 6,000 to $ 7,100.
The change would allow Georgians to save up to $ 75 a year on income taxes, although many would save less.
“I am proud to lead the House of Representatives’ continuing effort to provide meaningful tax relief to Georgia families,” Ralston, a Republican from Blue Ridge, said in a statement. “As a growing and prosperous country, we have an obligation to be good custodians of people’s money and to return as much of it as possible to them.”
The Republican measure driving the House tax writing effort is sponsored by Ways and Means Committee Chair Shaw Blackmon of Bonaire. He told the Ways and Sub-Committee on Wednesday that unanimously passed the proposal that would cost between $ 100 million and $ 150 million a year in lost revenue, though he said more accurate estimates were still being worked on.
If approved, it will come into effect on January 1, 2022, which means that the change will not fully affect the budget that lawmakers are writing now, which will expire on June 30, 2022.
The idea, Blackmon said, was to give a “modest” tax cut to as many people as possible.
“I think it hits most Georgians that we can get some kind of tax-free package,” Blackmon told the subcommittee.
Before the pandemic caused an increase in state revenue last year, Ralston had been looking for a bigger tax cut, the second in the state’s highest income tax rate.
Lawmakers cut the highest income tax rate from 6% to 5.75% in 2019 as part of a package of changes aimed at preventing income tax collection in Georgia from increasing sharply following changes to the federal income tax. However, the growth in income tax collection is below expectations after the changes have taken effect.
When the first phase of the tax cut was passed, lawmakers envisioned an additional quarter percentage cut to 5.5% this year. Ralston still supports it, but some senators have expressed doubts. Analysts estimate the country will forgo $ 500 to $ 550 million in revenue from another cut.
Blackmon said Ralston and House Republicans “would like to see us return” to this proposed cut “when there is greater certainty.”
Lawmakers cut $ 2.2 billion in spending plans last summer due to the coronavirus. They recovered $ 650 million with tax collection that was well above expectations, but most of the cuts made outside of K-12 spending have not been returned, and K-12 schools received only 60% of what was reduced. The state also announced one-off bonuses of $ 1,000 for preschoolers, K-12s, and college teachers, plus state employees, using federal funds.
Georgia could also get billions of dollars in federal aid added to its coffers in the coming months, although lawmakers in the state may delay their sessions for the year before Congress passes.
Danny Kansu, a budget analyst at the liberal Georgia Institute of Budget and Policy, said raising the record rebate was “much needed” and would help working families. But the group is also advocating for an income tax credit from the state, which could support employees’ earnings by up to $ 500 a year, at a total cost of $ 140 million.
“EITC will go to low- or middle-income households to boost health and economic outcomes,” said Gansu. “It is the most effective tool to help families during COVID and beyond.”
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