First of Two Tax Bills Read in House

A bill that would reduce Georgia’s top income tax rate to 5.25% from the current 6% was read for the first time in the House this morning. House Bill 435, sponsored by Reps. B.J. Pak of Lilburn and Brett Harrell of Snellville is the first of two tax related bills to be introduced this week. The other bill, which is expected to propose moving the state more towards a consumption tax, will be introduced by Rep. John Carson of Marietta at a 4:30 PM press conference.

In order to make the Pak/Harrell bill revenue neutral, there would only be two allowed itemized deductions: charitable contributions and home mortgage interest under $20,000. That would mean the elimination of many current deductions, including property and state income taxes paid, medical and dental expenses, casualty losses, and many miscellaneous deductions. While no fiscal note has been issued, Harrell says that research prior to the start of the 2015 session points to the tradeoff between fewer deductions and a lower rate as revenue neutral.

He also points out that the bill is designed to be have a small impact on most taxpayers, except for the tax benefit. Most taxpayers, of course, claim the standard deduction, and wouldn’t be affected at all. And as far as the limit on mortgage deductions, even if the interest rate rises to 8%, only mortgages over $250,000 would be affected.

Neither this bill nor the Carson bill to be introduced this afternoon are expected to pass this year. Instead, they are meant to start a conversation that could lead to real tax reform by the end of the session in 2016.

8 comments

  1. saltycracker says:

    So you get to keep the controllables, debt and giveaways but loose the uncontrollables, taxes, disease and disaster. God help us.

    Just scrap schedule A.

  2. gcp says:

    Carson has a pretty good bill; increase sales tax from 4 to 5%, reduce income tax from 6 to 4%, tax food and eliminate a bunch of credits and deductions. Its a good start.

    • saltycracker says:

      So how many hundreds of pages of codes and complexities does this eliminate ?
      The tweaks on income tax – a joke for corporations – while taxing foods is going to get him egged. They could run with 5% on almost everything and eliminate income taxes.
      Did he keep the crazy tax free days ?

      • gcp says:

        Well of course he missed a lot. Did not include eliminating such the private school scholarship credit (58 mil) gate cards (at least 40 mil) and others. I hope they dump that tax free day but not sure if that one included. The idea here is to move incrementally rather than doing everything at once.

        As for the 5% tax on food, well if someone can’t afford five more cents on a dollar maybe they should cut back on lotto tickets.

        • saltycracker says:

          The screams of the gamers on the low end will be deafening and the gamers on the high end will cry oh my don’t draw attention or its just a tactic to stay status quo.

          Cut both sales and income rates – Corp to zero – and simplify it with rare exclusions.

    • Will Durant says:

      With LOSTs, SPLOSTS, etc. we could end up with a higher sales tax than most of Tennessee if they keep at it. And they don’t have an income tax at all.

      Any sales tax reform better include knocking the GATE cards back to just feed and seed before they ever start talking about groceries again.

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