ATLANTA — The Georgia House has passed sweeping tax cuts that could eliminate any windfall revenue the state was expected to collect as a result of the recent federal tax overhaul.
The proposal, backed by Republican Gov. Nathan Deal, passed the House on Thursday, 134-36. It was immediately sent to the Senate where it’s expected to see a vote quickly, and Deal said he looked forward to signing the bill into law.
In unveiling the legislation Tuesday, Deal said it “represents one of the single largest income tax reforms in the history of our state.”
If no action is taken, the governor’s office now estimates Georgia could collect $5.2 billion in added taxes over the next five years because of the federal changes.
Deal, who’s in his final year in office, had hoped to defer the question of how to use those funds until 2019, saying there was too much uncertainty to make rate cuts. But he changed course after receiving blowback from GOP leaders, many of whom are seeking higher office or facing re-election in November.
The latest proposal would cut the top income tax rate for individuals and businesses from 6 to 5.75 percent in 2019, with the option for legislators to further cut it to 5.5 percent in 2020. It also doubles the standard deduction for all filers.
Those changes could erase the $5.2 billion surplus expected over the next five years and go further by giving Georgians an additional $500 million in tax cuts over the same period, according to estimates from the governor’s office.
Opponents of the measure argue that there’s far too much uncertainty, evidenced by the governor’s own changing position, to make rate cuts.
“If we treat this like Christmas, we’re gonna have January remorse when we can’t pay our bills,” Minority Whip Carolyn Hugley, a Democrat, said from the House floor Thursday.
Taifa Butler, executive director of the left-leaning Georgia Budget and Policy Institute, said that the rate cuts hold the potential for unintended consequences.
“Nobody knows what kind of funding and economic challenges are on Georgia’s horizon. Without more clarity, a rate cut is fiscally reckless and jeopardizes the state’s ability to meet the demands of a growing population,” Butler said.