House passes bill that would affect Georgia’s income tax

Published 5:29 pm Tuesday, March 7, 2017

The Georgia House of Representatives overwhelmingly passed a bill last Wednesday that will change the structure of income tax in the state.

House Bill 329 (HB 329) would make Georgians pay a flat income tax rate of 5.4 percent. The current setup separates Georgians into six different brackets, where rates start at 1 percent and rise to 6 percent depending on how much an individual earns.

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The bill would also give an earned income tax credit to low-income Georgians to make up for them paying higher rates than normal. According to the Atlanta-Journal Constitution, it would also itemize their deductions when they fill out their tax returns to write off their state income tax payments.

HB 329’s sponsor Jay Powell said this bill would work better than previous income tax bills, where legislators tried to fit too much into the bills.

“The bills that has been introduced in previous years has not gotten anywhere because it did too much,” Powell said. “Nobody was really sure what it would do. This is more of an incremental approach by doing away with brackets and lowering the rate.”

Those previous bills had too many moving parts, Powell said, which is why they never were passed.

Kelly McCutchen with the Georgia Public Policy Foundation testified for the hearing for the bill, calling it “radical incrementalism.”

“We are changing things, but doing it incrementally,” Powell said.

The tax credit aspect of HB 329 was crucial to keep low-income Georgians, who might fall in the 1 percent bracket under the current legislation, from paying an income tax out of their affordability range.

“If I did not have the earned income credit, this bill would hurt lower income people,” Powell said. “The earned income credit is supposed to help the folks that would be hurt by doing away with brackets.”

HB 329 doesn’t have a strong immediate effect and won’t have any adverse effects on the state budget at a cost of $25 million, but the bill is designed to welcome additions in future sessions.

With the bill now in the senate, Powell expects the bill to pass and head to Gov. Nathan Deal’s table for final approval. If passed, HB 329 would go into effect Jan. 1, 2018, which means Georgian’s would follow the new system when filing their tax returns in 2019.