Taxes are nobody’s favorite expense. Most people view them as simply a nuisance bill to pay or as an added cost on a major purchase. Average Georgians rarely give state tax policy a second thought, especially compared to critical challenges like education and health care. But few issues matter more to the pocketbooks of Georgia families, the bottom line of Georgia businesses and the ability of state and local governments to fund quality public services.
Tax policy is routinely front and center during state legislative debates, and at least a handful of bills make it into law each year. Georgia’s House and Senate passed 11 different tax bills this year, and the governor approved 10 of them. The projected costs and benefits are tallied in “Adding Up the Fiscal Notes: Final 2015 Tax Recap,” the Georgia Budget and Policy Institute’s annual accounting of state tax bills signed into law.
The largest tax measure by far is House Bill 170, a package of mostly sound reforms designed to raise nearly $1 billion a year to repair Georgia’s roads and bridges. The other nine measures include new corporate tax breaks, exemptions for nonprofits and a housekeeping bill lawmakers must pass each year. Combined, these nine bills cost an estimated $121 million in lost revenue over the next five years and $161 million over the next eight years.
The governor also prudently vetoed tax revisions proposed in House Bill 439. The measure would’ve split $110 million over the next eight budget years between a pair of tax credit programs designed to spur private sector investment: a new initiative called Georgia “New Markets” and a program created in 2013 called “Invest Georgia.” Setting aside the package with a veto gives lawmakers the chance to separate the good and bad aspects of that bill before possibly reconsidering it in future years.
The New Markets half of HB 439 raised serious questions from the start. It closely resembled some flawed initiatives in other states, as well as a tax credit scheme that Georgia lawmakers repeatedly rejected in the past. Supporters of this type of program pushed their case in Georgia since at least 2011, and the governor’s veto should be the end of the line. But if the proposal comes back in the future, legislators should bury it for good.
The Invest Georgia portion of HB 439 shows more promise. It’s more likely to target high-growth Georgia companies and includes some safeguards for how tax dollars are spent. Lawmakers should consider a modest down payment on Invest Georgia in coming years, then closely monitor its results to gauge whether the program works.
The 2015 legislative session is in the books. Those of us with more than average interest in state tax policy now turn our attention to 2016. Taxes are likely to be front and center again for lawmakers next year, perhaps in a big way. House leaders introduced a major tax ovehaul this session, House Bill 445, which they’ll likely consider next year.
The bill proposes some fundamental changes to the ways Georgia collects state revenues. It seems to carry serious implications for the average Georgian. Could working families wind up with a tax increase? Will it decrease state spending on schools and other services? GBPI will provide updated details and analysis on Georgia’s tax reform options in the coming months, so lawmakers and citizens can get a clearer picture of what’s at stake and whether better alternatives exist.