Tax Reform

chapter from the publication Guide to the Issues 2022

Overview

We believe in minimizing the impact that taxes have on economic growth. Taxes are necessary to fund core government services, but every additional dollar of taxes is a discretionary dollar taken away from a family. Taxes should consume as small a portion of income as possible, should not interfere with economic growth and investment, and should not place the state at a competitive disadvantage. 

Exemptions should be limited to encourage the broadest possible tax base and lowest rates since they shift the tax burden onto others. Tax policy should avoid picking winners and losers by not singling out individuals, products, businesses or particular groups for preferential treatment. 

Taxes should be designed to raise revenue to fund necessary government programs, not to micromanage economic decisions in a complex economy. High tax rates also distort economic decision-making. Everyone who is financially able should pay some tax to support the necessary services they receive from the government. Voting to grow government spending is easy if you don’t have to pay for it.

Taxation should focus on consumption rather than income, savings and investment. Economists generally agree that economic growth occurs in a system that taxes consumption rather than income. Finally, tax reform should ensure fairness and encourage simplicity and stability.

Recommendations

Continue to reduce the state income tax rate 

Fewer deductions and exemptions would simplify administration and improve compliance. A reduction of taxes on work, savings and investment results in job growth and higher disposable income for families. Lower tax rates give Georgia a competitive advantage, and a broader tax base will be more stable during recessions, reduce the need for emergency spending cuts and grow more quickly.

Low-income families will face better job opportunities in a growing economy and with all products taxed at the same low rate. Standard deductions and earned income tax credits are policy tools to offset any additional burden for low-income families.