![]() This same group would again be the overwhelming beneficiaries of the flat tax proposed in HB 949. ![]() No identifiable group in the state of Georgia has obtained a disproportionately larger share of the tax savings initiated by recent federal and state legislative changes than the highest-income earners. Legislation Would Limit Revenue-Raising Potential of State This is in stark contrast to our current system, which taxes lower levels of income at a lower marginal tax rate. Moreover, HB 949 would make a drastic structural change to how taxes are calculated as lower income tax payers are forced to pay higher rates without the benefit of the same level of itemized deductions that allow top earners to lower the amount of their income that would be applied to the state’s flat tax rate. Meanwhile, Georgians in the middle class-those earning between $38,000 to $108,000 per year-will pay an average of $5 more per year in taxes. The largest share of net tax savings, 42 percent, will be shared by filers making more than $572,000 per year the top 1 percent of income earners will, on average, benefit from a net tax cut of nearly $4,000 per year. If enacted, the only Georgians who will see an average annual tax cut greater than $13 are those earning more than $108,000 per year, or those in the top 20 percent of earners. This unnecessary change further skews the legislation’s provisions to benefit top earners, while largely ignoring the negative effects on low- to middle-income families. Finally, HB 949 also eliminates the state’s existing but small low-income tax credit, increasing state revenues by about $5 million. Although state leaders should, in fact, eliminate this provision from the tax code, using the resulting revenues to almost exclusively cut taxes for top earners rather than fund state priorities does not represent a positive step forward. Georgia remains an outlier in allowing filers to write-off state tax payments through a loophole that was adopted to mirror the federal State and Local Tax (SALT) deduction. The legislation raises taxes on households that currently take advantage of Georgia’s itemized deduction for state income taxes paid, increasing revenues by $130 million by raising taxes on about 543,000 households. HB 949 also includes two additional revenue-raising provisions to help finance the $826 million in costs associated with setting a top income tax rate of 5.375 percent. This analysis does not consider the effects of the federal conformity provisions, which the state’s fiscal note estimates will reduce revenues by $48.6 million in FY 2021, or the increase to the state’s existing foster-adoption credit, which state estimates project will reduce revenue collections by about $300,000 in FY 2021. Additionally, HB 949 includes two other provisions: an annual update that brings the state into conformity with 2019 changes to federal itemized income tax deductions and an increase in the tax credit for adoptive parents of foster children. The legislation also creates a low, non-refundable income tax credit intended to help address widespread tax increases that result from raising the tax brackets of low- and middle-income filers to 5.375 percent. House Bill 949 would eliminate the state’s current graduated tax structure, in which tax rates increase from 1 to 5.75 percent as income levels go up, in favor of adopting a single, flat income tax rate of 5.375 percent. ![]() Bill Proposes Tax Cuts for High Earners at Expense of Middle-Class Families This fiscal impact is partially offset by $75 million in net tax increases that would be shared by 538,000 low- and middle-income households. Overall, 88 percent of the $458 million in net tax cuts would go solely to filers earning over $108,000 per year.
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