PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Georgia’s Pro-Entrepreneur, Pro-Growth Tax Relief

By at 23 June, 2024, 10:19 am

by Raymond J. Keating –

If you haven’t been paying attention to policy changes in the state of Georgia, here’s an important change that you might have missed: The state legislature and Governor Brian Kemp have made tax changes that are pro-entrepreneur, pro-investment and pro-growth.

After shifting to a flat tax at the start of this year, the personal income and individual capital gains tax rate has been further reduced. So, the state went from a progressive tax with a top rate of 5.75 percent to a flat rate of 5.49 percent, and now to 5.39 percent.

For good measure, this tax rate is scheduled to decline each year until it registers 4.99 percent in 2028.

The corporate income tax rate also has been aligned with the personal rate, so it has been reduced from 5.75 percent to 5.39 percent, and is scheduled to fall to 4.99 percent as well.

Finally, voters will be able to vote on a constitutional amendment that would restrict increases in property taxes by limiting annual property value assessments on homes to the inflation rate.

What’s most striking about these Georgia measures is that they are reducing burdens from the most economically destructive taxes, i.e., income, capital gains and property taxes. After all, income and capital gains taxes limit returns on entrepreneurship and investment, and property levies raise the costs of investment.

Other states would be wise to look at what Georgia is doing, as the more competitive pro-business states are doing. My only recommendations would be to go deeper on the tax cuts; make relief immediate rather than phasing it in; and limiting assessments should apply to all properties, including commercial. After all, the quicker and more substantive the tax relief, the more beneficial it is for spurring entrepreneurship, investment and economic growth.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist, The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist and The Weekly Economist III: Another 52 Quick Reads to Help You Think Like an Economist.

 

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