PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

STATE SPOTLIGHT: Georgia Needs a Tax Cut

By at 4 February, 2020, 4:22 pm

by Raymond J. Keating-

Small Business Policy Index 2019: Georgia ranked 22nd among the 50 states.

SBE Council’s “Small Business Policy Index 2019” ranks the 50 states according to 62 different policy measures, including a wide array of tax, regulatory and government spending and performance measurements.

Small Business Tax Index 2019: Georgia ranked 24th among the 50 states.

SBE Council’s “Small Business Tax Index 2019” is included in the Policy Index report, ranking the states according to a wide array of tax measures, including income, capital gains, property, death, unemployment, and various consumption-based taxes like state gas and diesel levies.

Georgia passed a tax relief measure in 2018 that included a two-part reduction in the state’s individual and corporate income tax rates. The first step reduced its personal income, individual capital gains, corporate income and corporate capital gains tax rates from 6 percent to 5.75 percent. That is scheduled to be followed by a reduction to 5.5 percent this year, if approved by state legislators.

SBE Council’s “Small Business Policy Index 2019: Ranking the States on Policy Measures and Costs Impacting Entrepreneurship and Small Business Growth” ranks the 50 states according to 62 different policy measures, including assorted tax, regulatory and government spending measures. Georgia ranked 22nd, among the 50 states. The state also came in 24th on the “Small Business Tax Index 2019,” which is a subset of the larger Policy Index, whereby the states are ranked just on tax measures.

Tax Relief Would Improve Georgia’s Business Climate

If the next step in tax relief is approved, Georgia would improve its competitive standing among the states – for example, other things being equal, Georgia would move up to 19th on the Small Business Policy Index – and enhance returns on working, investing, and starting up and operating a business.

It’s also rather amazing and sobering to think about the facts that previous to this tax relief package, Georgia had not changed its corporate income tax rate since 1969 (when it was increased from 5 percent to 6 percent), and its income tax rate since 1937 (again, the rate was increased from 5 percent to 6 percent).

Let’s be clear: The 2018 tax measure was the first cut in the individual income tax rate in state history, and the first corporate tax rate reduction since 1964.

To say the least, tax rate relief in Georgia was long overdue.

And if state lawmakers are serious about enhancing economic, income and job growth in the state, then not only should the second part of the 2018 tax relief measure be approved, but further tax relief is needed.

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

 

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