Problems Expected for Georgia’s Shift from Income to Sales Taxes

Georgia Budget and Policy Institute


A proposal was made in Georgia to drastically cut or abolish state income taxes and replace them with a higher sales tax. Doing so would increase taxes for up to 80% of Georgia’s taxpayers and could also spike Georgia’s state and local sales tax averages up to nearly 15%, according to a

new study by the Georgia Budget and Policy Institute.

 


This study predicts, from analyzing other states, that the switch from income to sales tax has a potential impact to cut or eliminate the source of 50% of Georgia’s revenue aka income tax. The study also forecasted that the swap would require a combined state and local sales tax which could reach up to 15% to make up for the lost revenue. Also, doing away with income taxes would probably lead to spending cuts in crucial areas like education, transportation and public safety. Needless to say, this is going to negatively affect small business as they will need to increase their costs therefore shrinking the customer’s spending budget.

 


The first in a series of hearings held by the state legislative committee began in July to study the effects of the shift. The General Assembly convenes next January and two bills are set to be presented. As the plan adds specifics the study conductor will update the estimated numbers.