John Carson Introduces the More Take Home Pay Act

House Majority Leader Larry O'Neal and Rep. John Carson listen to Speaker David Ralston expliain the More Take Home Pay Act  Photo: Jon Richards
House Majority Leader Larry O’Neal and Rep. John Carson listen to Speaker David Ralston explain
the More Take Home Pay Act. Photo: Jon Richards
A proposal for a significant change in the way the state of Georgia collects taxes was introduced by House leadership late this afternoon. Called the More Take Home Pay Act, the measure would create a single income tax rate of 4%, down from the current 6%, increase the state sales tax from 4% to 5%, and rid the tax code of a number of current exemptions.

The 87 page bill, which became House Bill 445 when it was first read in the House Momday morning, is sponsored by Rep. John Carson of Marietta. Rep. Carson explained the bill and what it would do in a late afternoon press briefing, which you can listen to below.


 
Rep. Carson and Speaker David Ralston emphasized that the proposal is designed to close tax loopholes, especially those that don’t lead to job creation and growth. The goal of the plan is to lower taxes for all Georgians, with Carson estimating that a family with the average income of $48,000 would save around $400 per year under the plan. Another goal is to make Georgia more competitive with surrounding states. Undeer the plan, a 4% income tax rate would be lower than all other Southern states except Florida and Tennessee, which have no income tax. A sales tax rate of 5% would be lower than all but Alabama, Louisiana and North Carolina.

In a prepared statement, Carson said,

Georgia’s tax system is long overdue for commonsense reform. The More Take Home Pay Act empowers Georgians to make more personal choices with their hard-earned income, shifting the power away from the state and toward the kitchen table. Ultimately, this bill answers the need for an updated tax system that is flatter, fairer, and puts our families first.

Speaker David Ralston added,

“Representative Carson is continuing one of the General Assembly’s most important discussions and I look forward to an open, inclusive debate on this proposal. We need a tax structure that encourages families to save and businesses to invest so that Georgia can remain competitive with our neighboring states. This bill will go through the committee process and, as always, constructive input is welcomed.

While many tax breaks and tax expenditures would be zeroed out, consumers would see new sales taxes on a number of items, including groceries, digital goods (think iTunes and other downloadable items sold online), and cable and satellite TV. Cigarette taxes would go from the current 37 cents a pack to 65 cents a pack under the plan.

The bill, introduced on Day 20 of this year’s legislative session, is not designed to pass this year. Speaker Ralston emphasized that the need is to get tax reform right, rather than do do it quickly, noting that the last round of tax reform in 2012 took three years to accomplish. Rep. Carson’s bill, along with a separate bill introduced today will be part of that discussion going forward

Leadership has requested a fiscal note, which should be available over the next week or so.

10 comments

  1. saltycracker says:

    Where is the commonsense reform ?
    Looking forward to another line item tax/fee on my att bill, if there is room.

    When things get more complex, it is not tax reform but a platform for more political tweaking and exceptions.

    Where are the Republicans when we need them ?

  2. Dave Bearse says:

    Indeed, another GOP revenue neutral tax proposal that lowers taxes for all Georgians. FM.

    Kind of like the Highway Tax legislation that raises an additional $1B for highways without increasing taxes.

    The principle feature of this legislation is to reduce taxes on the rich, and increase taxes on the lower middle class and poor.

    Vogtle running three years behind is going to cost households an additional $400 in taxes. Why not legislation that eliminates pre-pay, or industry’s free ride?

  3. George Chidi says:

    This is apparently the only way an increase in the cigarette tax passes in Georgia.

    Look. A $400 net reduction in taxes on the median-income household would reflect a huge drop in per-household tax contributions. Georgia collects about $3200 per person in state revenue.

    But GPBI notes that the bottom 20 percent of Georgia taxpayers – those making less than
    $16,000 per year – pay about half a percent of their earnings in income taxes. One percenters —
    those making more than $433,000 – pay 4 percent.

    Meanwhile, the lowest 20 percent of taxpayers spend 4.4 percent of their income in general sales taxes, compared to 0.6 percent for the top 1 percent.

    So … everyone pays 25 percent more state sales tax — a move from 4 to 5 percent. Figure the lowest 20 percent of tax payers would end up paying 5 percent of their income in sales tax instead of 4.4, while one-percenters pay 0.67 instead of 0.6 percent. Those 1 percenters? They’re looking at an income tax cut of 33 percent, from 4 percent to something like 2.67. On an income of $450,000, that’s a net gain of $6000 a year.

    The poor will pay a half a point more in taxes, net. That’s doubling the taxes on people making under $16,000 a year. Which is stupid.

    Someone will undoubtedly correct my back of the envelope math shortly.

  4. MattMD says:

    This is a very, very bad idea.

    We do not need to put more taxes on the poor and lower middle class and we certainly do not need taxes which are much less likely to bring in revenue during economic downturns.

  5. WeymanCWannamakerJr says:

    2% more take home pay to turn around and give 5% more in groceries? That might work in Connecticut. Georgia has too many people at the bottom end of the pay scale however.

  6. blakeage80 says:

    Other than cutting some of the massive corporate tax breaks to help pay for roads and education, is there really a large outcry for tax reform here? I mean 6% income and a reasonable 4% in sales + user fees. I don’t really feel all that burdened by Georgia’s taxes and I am not a rich guy. Besides, it seems like the government can’t mess with taxes unless it’s to raise them while saying it’s revenue neutral. I think we’ve learned that from the way they’ve treated the transportation bill.

    • Will Durant says:

      In a perfect world all politicians would always call a spade a spade, or at least a shovel. The best example I can think of a “revenue neutral” bill that was not was the “elimination of the birthday tax” done on behalf of the automobile dealers. I think the transportation bill is needed and would prefer it be sold as a tax increase that is the lesser of evils vs. privatization, toll roads, VMT, etc. The Grover Norquist pledge thing should be a lesson learned that you can never say never in politics.

      • blakeage80 says:

        Yes, but if they said, “Yeah, this is a tax increase.” then they’d have to say why we need it now instead of shifting funds around to make it happen. They would have to be open to some scrutiny of spending that, incredibly, they seem to have avoided thus far. I’ve seen nothing on why we can’t make room in the budget for more transportation spending. I have become a skeptic of the whole way they are going about this in the past few weeks. I get the need for transportation improvement and don’t argue it. I agree with the shift to an excise tax and I agree with focusing motor fuel revenues on transportation, but I think the state is pushing the burden onto counties and cities without adequate explanation of why there isn’t enough revenue at the state level to address this issue. I’m not just talking about GDOT’s budget either. I mean the whole treasury. I’m not saying there is never a time to raise taxes, but when the state does, they need to clearly demonstrate that they have left no stone unturned in the current budget and they obviously haven’t done a very good job of that for most folks.

  7. Three Jack says:

    Hey right hand, left hand here. Why don’t we try to do tax reform together instead of picking portions off individually that will ultimately result in a bigger mess than the current mess.

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