The Special Council on Tax Reform and Fairness for Georgians provided recommendations that make improvements to structural issues plaguing Georgia’s tax system. The Tax Council took strong action to broaden tax bases—a tenet of good tax policy. In the sales tax, the Tax Council recommended expanding the tax base to services, which would allow the tax system to better reflect current spending habits of Georgians and better track the economy in the future. They also recommended expanding the income tax base by reducing exemptions, credits, and deductions.
Although the Tax Council’s recommendations would improve Georgia’s ability to meet current and future needs, they would do so by shifting taxes away from wealthy Georgians and onto middle- and low-income Georgians. The best-off one percent of Georgians, those earning more than $389,000 in 2010, would receive an almost $7,800 average tax decrease. In contrast, middleand low-income Georgians would see an average increase of $394 and $83, respectively, according to preliminary estimates by the Institute on Taxation and Economic Policy.
Legislators could make one of the following three adjustments to the Tax Council’s recommendations to lessen that tax shift, while maintaining the Tax Council’s improvements to long-term finances.