ATLANTA – With Georgia’s finances in better shape than around this time last year, the General Assembly is expected to consider tax breaks for low- and middle-income Georgian families this winter.
House Bill 510, which was introduced last February, would provide a state-level Earned Income Tax Credit (EITC) modeled after a federal tax credit that has been around since 1975.
A state EITC would help support the results of working Georgians whose livelihoods have been disrupted by the coronavirus pandemic, said Georgia Representative Ron Stephens, one of the bill’s co-sponsors.
“The other party thinks cutting government checks is the answer,” Stephens, R-Savannah said. “We believe in encouraging people who are going to work to continue working. “
Both Democrats and Republicans support the legislation. Representative Scott Holcomb, D-Atlanta, is also one of his cosponsors.
The measure also enjoys public support. A statewide poll released last month by the Georgia Budget and Policy Institute found nearly 70% approval for the use of a portion of Georgia’s share of federal COVID relief funds -19 to create a state-level earned income tax credit.
Danny Kanso, senior policy analyst at the institute, said President Joe Biden’s $ 1.2 trillion infrastructure bill that would reach Congress will provide a lot of money for improving water and sewers and broadband expansion in Georgia.
This means that the $ 4.8 billion the state will receive from the U.S. Congress for the bailout passed last March should be available for the proposed tax credit, he said. The credit would cost the state around $ 130 million per year, according to the institute’s calculations.
“It would benefit more than a million children in Georgia and their families,” Kanso said. “In some rural counties, more than 50% of families are eligible. It is a strong motivation for rural legislators.
Under House Bill 510, Georgians would be eligible for the state-level EITC if they are eligible to receive the federal tax credit. The state-level credit would be equal to 10% of what qualified taxpayers receive from the federal credit.
Kanso said nearly 30 states already have a state-level earned income tax credit, including South Carolina and other heavily Republican states.
Kyle Wingfield, president and CEO of the Georgia Public Policy Foundation, said the budget surplus the state has racked up despite the economic ravages of the pandemic means the General Assembly can afford an EITC at the level of the State.
“Georgia’s sound fiscal stewardship, especially during the pandemic, has put it in a good position to provide relief to Georgian taxpayers,” Wingfield said. “We expect a variety of strong proposals to do just that.”
Stephens said he expects legislative Republicans to push forward several tax relief proposals during the 2022 legislative session, including a further reduction in Georgia’s income tax rate. Lawmakers cut the rate from 6% in 2018 to 5.75% but have yet to promise a second round of tax cuts, citing the effects of the pandemic on state finances.
Stephens has said he would like to see the state’s income tax rate reduced to 5.5% or less.
“We need to reduce our income tax to compete with neighboring states, especially North Carolina,” he said.
In addition to lowering Georgia’s income tax rate and providing a state-level earned income tax credit, Stephens said lawmakers could also consider exempting veterans at state income tax retirement.
This story available through a partnership with Capitol Beat News Service, a project of the Georgia Press Educational Foundation.