ATLANTA (AP) — Georgia senators have proposed a much more modest income tax cut than the A $1.1 billion plan passed by the Houseand also want to drastically cut tax breaks for film and television productions that have been credited with turning the state into one of the biggest filmmaking centers in the world.
The Senate Finance Committee voted Monday to make major changes to House Bill 1437, setting up what could be a showdown over a top priority for Republican House Speaker David Ralston of Blue Ridge with a week remaining in the 2022 regular session. The full Senate could debate the bill as early as Wednesday, but Senate passage would only set the stage for the main event – negotiations between the Senate and the House.
“We obviously know this is going to go back and forth between the House and the Senate,” said Senate Finance Committee Chairman Chuck Hufstetler, a Republican from Rome.
The Senate plan would create by 2032 — or possibly later if state tax revenues falter — a one-time fixed income tax of 4.99%. This is a lower rate than the 5.25% proposed by the Chamber. But while the House would eliminate many deductions, the Senate would retain the current deductions.
Hufstetler said the House proposal raised taxes for some people who detailed, while he aimed for a bill that would lower everyone’s taxes. His proposal focuses the first years of benefits on low-income people.
“Every income bracket gets a tax cut,” Hufstetler said. “I think it’s fairer, and I also think it’s fairer to help those on the bottom first.”
Georgia’s top tax rate is now 5.75%.
Hufstetler’s plan would create a flat rate of 4.99% in stages, starting in 2024, with married couples earning less than $20,000 a year and singles earning less than $13,000 a year. The highest rate for everyone would drop slightly to 5.7% in 2024, from 5.75% currently. Most people would notice the changes when they file their taxes in 2025.
The 4.99% rate would increase the income scale in nine steps. But the tax cuts would pause any year in which state revenue does not increase by 3%, any year in which revenue is lower than any of the previous five years, or any year in which the ‘State has no more money in its savings account than the tax cut would cost.
Hufstetler said the senators wanted to avoid “budget concerns” that could be caused by a lack of revenue-crimping spending.
He said a formal revenue estimate was being prepared, but said his package would cost $233 million in the first year, reaching $500 million or more.
The bill also includes an earned income tax credit for low-income earners that would be up to 10% of the federal EITC, a cap of about $675 this year. Unlike the federal credit, someone could not recover more than they paid in state taxes.
Blackmon told The Associated Press in an interview after the meeting that he had not seen Hufstetler’s proposal. He said he was supportive of her approach, although he told senators he was open to negotiations.
“I think it’s very simple. It’s fair for everyone,” Blackmon said. “I think no plan is perfect. I would say we let, I think, lower middle income families keep more of their money.
An analysis by the liberal-leaning Georgia Budget & Policy Institute, using modeling from the Institute on Taxation and Economic Policy, showed that 62% of the benefits of the House proposal would go to the top 20% of filers in Georgia. About 20% of filers earning more than $64,000 a year would see tax increases, according to the GBPI analysis.
Hufstetler would also cap the movie tax credit at $900 million per year. Championed by Republican governors for more than 15 years, these credits have fueled explosive growth in film and television production in Georgia. The Office of State Planning and Budget estimates that the state will forgo $1.07 billion in credit revenue this year.
More importantly, Hufstetler would prohibit film companies from selling the tax credits they cannot use to others. Without these transfers, production companies would likely only be able to use a fraction of the credits they accumulate. After December 31, transfers would be prohibited. All outstanding transferred credits are expected to be cashed out by December 31, which could wipe out a large portion of the $1 billion in outstanding credits.
Hufstetler has long wondered if Georgia got its money’s worth from the tax credit.
“For me, there are big problems with the program, but what we are saying is that in the meantime, let’s put a reasonable ceiling in place to prevent it from spiraling out of control,” he said. declared.
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