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 Amid record spending, senator wants Georgia income taxes slashed

Less than a week after Gov. Nathan Deal proposed record state spending, Georgia Senate Finance Chairman Judson Hill is calling for a constitutional amendment to lower the state’s income tax take.

Those two things — record state tax collections and a bill to cut taxes — may be more a coincidence than anything else, since Hill, a Marietta Republican, has proposed cutting income taxes for years.

Senate Bill 280 would reduce the maximum state income tax rate from 6 percent to 5.4 percent and increase personal exemptions that filers can take. It would also limit some itemized deductions, although it would preserve some of the biggest ones. And it would eliminate the so-called “marriage penalty” and corporate net worth taxes.

The lawmaker also is proposing a constitutional amendment — Senate Resolution 756 — to reduce the maximum personal income tax rate to 5 percent, depending on state revenue and the size of the state’s reserves.

Hill has requested a “fiscal note” to find out how much it would cost. However, cutting the maximum income tax rate by 10 percent alone, as the bill would require, would mean Georgians would pay about $1 billion a year less in taxes. And the state would take in $1 billion less in revenue to help fund things such as the education of more than 2 million students, public health care programs, economic development initiatives, and parks and water projects.

“We need to do all we can to reduce the tax burden on Georgia’s hardworking families, and my tax relief act does that,” Hill said. “Revising our current tax law would allow Georgians to keep more dollars in their pockets and make their own decisions on whether those dollars should be saved, invested or spent.”

House members filed a big tax overhaul bill last session. So far, it hasn’t gotten any traction.

Deal warned lawmakers off any major tax cut bills this session. State finances have only in recent years recovered from the Great Recession, when governors and lawmakers across the country vigorously reduced spending to keep the books balanced.

But some Republican lawmakers, who are up for re-election this year, may be feeling pressure to cut taxes after backing a $900 million fuel and hotel tax increase last year to pay for transportation improvements.

Critics are already attacking last year’s tax increase in the Legislature. Senate Bill 252, sponsored by state Sen. Josh McKoon, R-Columbus, would repeal the hotel tax tacked onto room bills last year.

Revenue bills — like tax cuts — by law must start in the state House, and Hill considers his measures a conversation starter of sorts. But Senate tax proposals can and have in the past been attached to House bills late in the session.

And Senate President Pro Tem David Shafer, R-Duluth, was behind a proposed constitutional amendment that capped the maximum state income tax rate at 6 percent in 2014. Voters overwhelmingly approved that amendment. Shafer and Hill are longtime supporters of cutting, if not eliminating, Georgia’s income tax.

Hill said his proposal would bring Georgia tax rates below those of North Carolina and South Carolina.

The Tax Foundation put out a report this week saying Georgians had the 32nd-highest state and local tax burden in the country. However, local taxes pump up those numbers. Most reports say Georgia has some of the lowest state taxes in the country.

Wesley Tharpe, a tax expert with the left-leaning Georgia Budget and Policy Institute, isn’t so sure Hill’s plan is a good idea.

“What we’re really looking at is if there are ways to smartly cut and smartly reform taxes for Georgia families,” Tharpe said. “The challenge is getting those details right. It’s very difficult to do that without blowing a hole in the state budget.

“It’s perfectly understandable that tax cuts sound great in the abstract,” he said.

Tharpe declined to talk about the political implications, but lawmakers are heading into a campaign season this year on the heels of passing the fuel and hotel tax increase.

While Deal wants to use extra revenue to shore up state reserves and build bridges and roads, some lawmakers may want to cut taxes to make election time a little easier. Lawmakers have passed or come close to passing several last-minute tax cuts in election years over the past few decades.

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