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.