State Republicans in Georgia have released a new plan that would eliminate state income tax for the majority of residents.
State Sen. Appropriations Chairman Blake Tillery announced the plan, which would end income tax for the first $50,000 an earner makes, on Tuesday. Married couples would not pay income tax on their first $100,000. Eventually, income taxes for higher earners and businesses would also be eliminated.
The report by Tillery emphasized that the income tax plan would not raise the state sales tax, create a statewide property tax, nor mandate deep cuts to state services.
Lt. Gov. Burt Jones created the tax policy committee last summer to explore options for eliminating income tax. The committee is set to meet Wednesday to review and adopt the report.
Eliminating state income tax, which rakes in roughly $15.7 billion per year, about half of all state funds, could have a sizable impact on the state’s General Fund that allocates money for education, healthcare, public safety, and infrastructure.
Tillery said the first year of the plan is already funded by the $1.8 billion in surplus revenue from 2025 and another $1 billion created by moving state funding from cash to bonds.
After that, Tillery said reducing or eliminating roughly $30 billion allocated toward special-interest and corporate tax credits could help make up for lost income tax.
Additionally, the state is starting in a position of strength. Georgia’s gross domestic product has surged over the last 10 years, with an increase of nearly $3 billion.
While Jones and Tillery push for their plan to eliminate income tax, Gov. Brian Kemp (R-GA) hasn’t indicated whether he will back it or not.
Economist Arthur Laffer, who served on President Ronald Reagan’s Economic Policy Advisory Board, appeared before the committee to urge lawmakers to eliminate income tax.
“You can get rid of your income tax in one year if you fold your income tax into your sales tax and get rid of your sales tax expenditures,” Laffer said. “And that would incredibly jettison your economic growth.”
Nine other states have successfully eliminated personal income tax, including neighboring Florida. However, while Georgie’s state sales tax rate sits at 4%, most of the other income-tax-free states rely on 2% to 3% higher sales tax rates to help balance the budget.
Georgia Public Policy Foundation President and CEO Kyle Wingfield also spoke in favor of the tax elimination and said in doing so, lawmakers are telling Georgians, “Your money is going to go farther in the future than it used to.”
Two of the three Democrats on the committee, state Sens. Nan Orrock and Ed Harbison, are the main critics of the plan, arguing it would primarily benefit high earners.
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“Republicans want to jack up taxes on the middle class to give rich people a massive handout,” they said in a statement following the committee meeting. “At the end of the day, they’re making the affordability crisis worse and saying they’re doing you a favor. Democrats on this committee are appalled by this wrongheaded, disastrous proposal.”
Alongside Orrock and Harbison sits the Georgia Budget and Policy Institute, which echoed the senators’ opinions that the plan would disproportionately affect the middle class.