State of the Week: Georgia -Will Recent Tax Improvements Last?

By at 25 October, 2018, 9:20 am

Small Business Insider

by Raymond J. Keating-

Small Business Policy Index 2018: Georgia ranked 20th among the 50 states.

SBE Council’s “Small Business Policy Index 2018” ranks the 50 states according to 55 different policy measures, including a wide array of tax, regulatory and government spending and performance measurements.

Small Business Tax Index 2017: Georgia ranked 26th among the 50 states.

SBE Council’s “Small Business Tax Index 2017” ranks the states according to 26 different tax measures. Among the taxes included are income, capital gains, property, death, unemployment, and various consumption-based taxes, including state gas and diesel levies.

Peachy: Tax Relief for Businesses and Individuals

Earlier this year, Georgia lawmakers agreed to a tax relief package that featured reductions in the state’s personal and corporate income tax rates. That’s good news. However, there are questions about the future of these measures.

According to the Small Business Policy Index 2018: Ranking the States on Policy Measures and Costs Impacting Small Business and Entrepreneurship, which I write for the Small Business & Entrepreneurship Council, Georgia ranked 20th best among the 50 states. And it earned number 26 on the Small Business Tax Index 2017. So, there’s room for improvement.

The legislation passed and signed into law by Governor Nathan Deal (R) reduces the top personal and corporate tax rates from 6 percent to 5.75 percent starting in 2019. In addition, both rates could be further reduced to 5.5 percent in 2020 if the new governor and legislators agree.

These measures are temporary, scheduled to expire at the end of 2025, unless, of course, lawmakers make them permanent before that point. The 2025 expiration date lines up with the expiration of the federal tax changes for individuals implemented in late 2017. However, while the reduction in the federal corporate income tax is permanent, Georgia’s corporate income tax cut would expire at the end of 2025 with the rest of the package.

On the Chopping Block?

As for the current race for governor, Stacey Abrams, the Democratic candidate, had pledged to repeal the tax cut legislation, but she recently reversed course and said that she would let the legislation stand.

Meanwhile, Brian Kemp, the Republican candidate, has called for reducing income tax rates beyond the current legislative schedule, saying: “I believe by budgeting conservative in the future and controlling and reducing spending, we can further lower the rates than what’s already been proposed, and I am going to be working on that as governor.”

Reducing individual and corporate income tax rates is a big positive for individuals, families, entrepreneurs, small businesses and investors in Georgia, and therefore, for the state’s economy and competitiveness.

However, it remains critical that such tax relief be permanent, and of course, further tax rate reductions would expand the potential benefits. But this all depends upon the outcome of the gubernatorial election on November 6.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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