Gov. Nathan Deal and top Republicans in the Legislature announced Tuesday they want to lower income tax rates for individuals and corporations in Georgia. It’s part of a plan to cut into the estimated $4.7 billion state budget windfall over the next five years, resulting from the new federal tax law.
The plan from top Republicans would double the standard deduction for Georgia taxpayers, effective January 2018; lower the state income tax rate from 6 percent to 5.75 percent, effective 2019; and set up lawmakers to lower the rate even further to 5.5 percent for 2020.
Deal said it would save taxpayers $5 billion over the next five years.
“We are confident that our approach will pass through both houses quickly and will be sent to my desk, where it will be signed quickly,” Deal said Tuesday at a rare press conference with Lt. Gov. Casey Cagle and House Speaker David Ralston.
The plan is likely to become law quickly, which worried Wesley Tharpe of the left-leaning Georgia Budget and Policy Institute.
“The rush to cut income taxes this year carries a lot of risk of unintended consequences,” Tharpe said.
Tharpe said Georgians are already slated to save nearly $9 billion a year in federal taxes, thanks to the law recently passed in Washington.
He encouraged lawmakers and taxpayers to think of the estimated windfall “not as a tax hike, but as an insurance policy against these highly uncertain headwinds that Georgia might be facing: federal budget cuts or potentially another recession down the road.”
With midterm elections coming up later this year, Republicans likely won’t hesitate to share their support of the tax plan with potential voters.
“This tax cut will empower Georgians to save more of their money. It will empower them to build better lives for themselves and their families,” said Ralston.
Gov. Deal had made a series of proposals since the beginning of the annual legislative session about how to handle the revenue bounty likely coming to Georgia as a result of the new federal tax law.
He first advised lawmakers to hold off on making any changes, and then he made a proposal to cut into the revenue boom by about $1 billion. Both plans drew criticism from Republican lawmakers.
“I think lawmakers understandably are feeling pressure to avoid the appearance of what might look at first glance to be a sizable income tax increase,” said Tharpe, referring to the windfall.
On Tuesday, the top GOP leaders in the House and Senate stood next to Deal, showing their support for the governor’s latest plan.
“Conservative spending policy allows for conservative tax policy, and I’m extremely proud that Georgia families will keep more of the money they earn to save for their futures and to provide for their needs,” said Cagle, a Republican candidate for governor.
