Tax code

It’s time to update the state tax code

“When you add all that up, the changes that have been made over the last 20 years, overall, they tend to favor those with the highest incomes, businesses and attract white taxpayers rather than d ‘be fair to all Georgians,’ said Danny Kanso, author of the report.

To exploreGeorgian Senators Consider Review to Modernize Tax Code

Under Georgia’s income tax system, people with the lowest incomes pay a disproportionate share of their income in taxes. If you are in the 20% lowest earner in Georgia – less than $ 20,000 per year – you pay 10.4% of your income in local and state taxes. If you are in the top 1% of income – over 481,000 per year – you pay around 7% of your income in local and state taxes.

For sales and use taxes, Georgia taxes most goods. But some grocery items are exempt. Most services are also tax exempt. Accommodation, transportation within the state, ticket sales, and fees for participation in games and entertainment activities are taxed. The system makes the sales tax more vulnerable to changes in economic conditions, Kanso said. It also grants preferential treatment to businesses and professional services.

I imagine some of you don’t believe that we operate under tax code structures created over 80 years ago. The world has changed. The economy has changed. But we haven’t taken these changes into account in the way taxes are applied, Kanso said.

First of all, let’s make sure we understand a little bit about Georgia tax history.

Georgia generated most of its revenue from state-owned railways until 1843. One of the first non-rail taxes was poll tax – money paid to vote.

Formalized in 1804, the tax levied 31 cents for white males to vote, according to the GBPI report. Three years later, the tax was revised so that free people of color pay $ 4 to vote. By mid-century, the voting tax had dropped by almost a penny for white males and increased by a dollar for free people of color. Slaves could vote for the cost of $ 150, although it is not known how they would do so since they received no real wages.

Under the 15th Amendment, the former slaves could vote. Georgia was the first southern state to institute a cumulative voting tax, which meant free black men could vote, but only if they paid a lot of back taxes.

Georgian voters then added a literacy test to the mix, so if you couldn’t read, like most blacks who were denied an education, then you couldn’t vote. All white men who could not read could still vote if they had an ancestor who served in the Civil War or if they were already registered to vote. Voting taxes remained in place until 1945, meaning baby boomers were the first generation of Georgians born in a state without voting taxes.

At the end of the 19th century, property taxes were the main source of government revenue. In the early 1900s, the state’s tax expert assessed equal properties at different rates depending on who owns the houses.

Later that century, when white residents fled the city for the suburbs, the properties they left were devalued but tax assessments did not change. Residents who stayed in Atlanta, especially in neighborhoods with many black residents, had to pay hefty taxes on overpriced homes. Georgians still face the lingering impact of these issues when paying county taxes, but the state stopped collecting property taxes in January 2016.

Today, most of Georgia’s income comes from personal income tax. Beginning in 1931, residents of Georgia paid one-third of the tax rate paid as federal income tax, according to the GBPI report. In 1937, the state introduced the six-hook system which is still in use today. Of the states with a bracket structure, Georgia is among the narrowest, meaning that most residents, like anyone with an income threshold above $ 7,000, pay the highest tax rate. by 5.75%. This effectively makes it a flat tax.

“Most of the brackets we have in state law today were created in 1937 with income thresholds where you hit the maximum rate at $ 7,000 as an individual or $ 10,000 as a married couple “Kanso said. “If the state just adjusted for inflation, those brackets would be $ 130,000 for individuals and $ 185,000 for married couples and we would have a graduated system where as you earn more you pay. a higher rate. “

In 2019, the top bracket fell from 6% to 5.75%. In March, Governor Brian Kemp enacted a tax cut that increases the standard tax deduction.

To exploreKemp promulgates income tax cut for many Georgians

But debates continue as to whether to consolidate the old tier system and move to a flat tax rate and reduce or revise the tier tier system that taxes high incomes at higher rates.

“A flat tax may seem simple, but what it represents is low and middle income Georgians who pay the most, because high incomes, due to tax code exemptions, would be able to lower this tax. rate more than the average taxpayer, ”Kanso said.

I leave it to our elected officials to get rid of it, but almost a century, it is a long time to wait for change.

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