According to the Tax Foundation, the nation’s leading non-partisan tax policy research think tank, Georgia’s individual income tax system is divided into six brackets with a top tax rate of 6% – ranking Georgia as the 23rd highest among states levying an individual income tax in the United States. Georgia’s corporate income tax is also a flat 6% tax rate, the 13th lowest among states levying a corporate income tax. Several states have already eliminated their state income taxes. In FY 2011, seven states – including Florida and Texas – had completely eliminated their individual income tax, while Tennessee and New Hampshire have chosen only to tax interest and dividend income but not to tax wage income.
On the corporate income tax front, three states – Nevada, Washington and Wyoming – have eliminated corporate income tax, and Texas’s margins tax is not classified as corporate tax revenue. Mark Rider, associate professor of economics at Georgia State University, said that eleven other states are considering similar tax reforms shifting away from income tax towards more consumption tax. One of those states is North Carolina – a competitor of Georgia’s – who reduced their state personal income tax rate this summer.
Reducing the income tax in Georgia can help to bolster the state’s competitiveness in attracting and keeping businesses and individuals.
As Senator McKoon recently told the Council, “The single greatest thing we can do as policy makers to improve Georgia’s business climate is to eliminate the state income tax. 9 of the 10 fastest growing states over the last decade had one thing in common: no income tax.
Abolition of our state income tax will allow small business to hire more employees and make vital capital investments. It will bring high net worth individuals to our state and encourage businesses to locate here. That is why I’m excited to work with my fellow senators on a plan for Georgia to phase out our income tax.”
The Council for Quality Growth believes that SR 987 would foster valuable conversations regarding Georgia’s current tax structures and how it could improve its competitiveness in the future, and will continue to monitor this bill through the course of the legislative session. We look forward to working with others and helping to facilitate this important conversation in order to foster responsible growth in our state and region.