Looking ahead to the 2022 election season, a number of Georgia Republican candidates for statewide offices are running on a platform of repealing the state income tax.
However, other lawmakers believe that this could potentially create a massive hole in the state’s finances.
“What we get from income tax in the state of Georgia basically equates to what we put on K-12 education,” Republican state Rep. Terry England told WABE. “So if you’re looking at eliminating the income tax, there’s quite a hole that gets pulled out.”
The annual state budget is about $27 billion. More than $10 billion is for public K-12 schools.
England currently chairs the House Appropriations Committee, which is responsible for writing the budget for the state’s agencies and departments. He said corporate and personal income taxes add about $13-$14 billion dollars a year to Georgia’s budget.
Any revenue lost from repealing the income tax needs to be replaced or cuts need to be made to the state budget, England said. One option is to fill the void by increasing the state sales tax or taxing services like dentists, doctors and lawyers, he added.
The state sales tax is 4%. Counties can add more for things like education, transportation and transit. Currently, the average Georgia shopper pays around 6-9% in sales taxes, depending on where they live.
“When you show up to the store instead of paying 7%, you would be paying 17% for something you buy,” England said. “The part you have to tread lightly on is that studies have proven once you get above 10% sales tax, it becomes regressive.”
In Georgia, sales taxes are not put on services, raw materials for manufacturers, raw materials for farmers, food and medicine. England worries that the repeal would drive people living on the state’s borders to shop in Alabama and South Carolina, which can negatively impact Georgia retailers.
England also questioned why the changes are necessary. “Georgia has the second-lowest state tax burden of any state in the country already,” he said.
According to the Sales Tax Institute, Alabama’s sales tax is 4%, Tennessee’s is 7%, South Carolina’s is 6%, North Carolina’s is 4.75% and Florida’s is 6%.
