Georgia Senators consider ending state income tax, proposal could raise sales tax to 12%

A committee of Georgia state senators met for the fourth time on Monday to discuss the potential to eliminate Georgia’s income tax.

State Sen. Blake Tillery, the committee chair, began the meeting by reminding those present why the senators were discussing this issue.

“I think it’s evident if you’ve watched anything in recent news stories or even the recent elections that folks are really feeling the pinch in their own homes whether it be on groceries, gas, child care,” Tillery said.

Georgia Public Policy Foundation President Kyle Wingfield testified before the committee, and highlighted benefits of eliminating the income tax in Georgia.

“When you lower the rate and you do it on a permanent basis, you’re telling business owners, you’re telling entrepreneurs, you’re telling households, your money is going to go farther in the future than it used to,” he said. “That’s a powerful incentive for people to work more, to save more, and to invest more. And those three things are the lifeblood of our economy and the growth of our economies.”

Patrice Onwuka, director of Independent Women’s Center for Economic Opportunity, said lifting the state income tax could specifically benefit women and the economy in Georgia.

“We are a powerful economic agent as consumers, producers, and investors,” she said. “Women are very sensitive to tax policy. Now, number one, eliminating the income tax empowers women to cope with today’s affordability crisis.”

The state would need to increase the sales tax rate to 12% to compensate for the loss in revenue of eliminating the income tax, according to a Georgia Budget and Policy Institute report. That is three times the current sales tax rate. The report states that this move would transfer wealth from the middle class to high-income individuals.

Senate Democrats Nan Orrock and Ed Harbison, who are both members of the special committee, released a joint statement Monday criticizing the effort.

“Republicans want to jack up taxes on the middle class to give rich people a massive handout. This handout will make raising a family, buying a house or running a business more expensive. Almost every Georgian would see their tax bill increase by a month’s worth of groceries. At the end of the day, they’re making the affordability crisis worse and saying they’re doing you a favor. Democrats on this committee are appalled by this wrongheaded, disastrous proposal,” read the statement.