Capitol Update – Tax Cuts and Criminal Justice Reform
Significant revisions to our tax code and criminal justice system mark a historic week at the Georgia General Assembly.
HB 386, the Georgia Jobs and Tax Reform Plan, and HB 1176, the Criminal Justice Reform Act, are well vetted proposals that data, financial modeling, and studies indicate will benefit Georgians for many years to come.
HB 386, the Georgia Jobs and Tax Reform Plan implements a number of tax reform measures that results in an overall tax cut for Georgians. Fiscal Note to HB 386 here.
Among its many components, HB 386 eliminates both the sales tax and the “birthday tax“ (the annual ad valorem vehicle property tax), on cars, trucks and vans. Replacing these taxes is a one-time “title fee“ on new or used vehicles equal to 6.5 percent of the car’s value. All vehicles purchased after March 1, 2013 will use the new title fee system. In Gwinnett, our current sales tax rate is 6%; so, a vehicle purchased after March 1, 2013 will pay a one-time “title fee” of 6.5% instead and NEVER pay the yearly ad valorem tax for as long as you own your car, truck, or van. For most, keeping a vehicle more than two years results in significant tax savings.
HB 386 reduces the “marriage penalty” in Georgia’s income tax code by increasing the exemption for married couples by $2,000. Those with a “Married Filing Joint” status will benefit from an exemption increase from $5,400 to $7,400 reducing Georgia income taxes by $140 million per year.
HB 386 closes a loophole in our tax code providing a competitive advantage to non-Georgia retailers over our local businesses. Most retail sales to Georgians, online or not, are taxable. While local retailers collect the sales tax, their out-of-state counterparts do not. Instead, the burden to remit the sales tax in the form of use tax, a requirement since the 1950’s, is on the consumer – you. The “E-Fairness” provision of HB 386 willend the competitive advantage out-of-state retailers have over local businesses by requiring out-of-state sellers to collect and pay Georgia sales taxes – approximately $30 million a year. Not only will this end an unfair tax policy putting Georgia small businesses at a disadvantage, but it will also remove a reason for out-of-state retailers to maintain their facilities and jobs out of Georgia.
HB 386 reinstates the sales tax holidays on school supplies and energy efficient items for the next two years saving consumers approximately $138 million.
HB 386, the Georgia Jobs and Tax Reform Plan also implements business friendly tax proposals improving the environment for private sector job creation.
HB 386 eliminates sales tax on energy inputs in manufacturing saving our manufacturers approximately $150 million per year when fully phased-in. In some instances, this tax is second only to payroll as the largest single expense for our manufacturing sector. Elimination of the tax puts Georgia manufacturers on equal footing with our southeastern competitors.
The legislation permits projects of regional significance to exempt the sales tax on construction materials and lowers the state sales tax rate on aviation fuel making Georgia a more attractive business destination.
HB 386 revises Georgia’s patchwork of agricultural tax exemptions into three broad input exemptions that saves our agricultural producers about $17 million every yearand ensures fairness and consistency within Georgia’s largest industry.
Additionally, the bill eliminates the sales tax exemption on goods used for film production restoring about $11 million per year while preserving the 30 percent credit, caps the retirement income exclusion for seniors at $65,000 per person, and limits a tax credit for land conservation easements curtailing abuses and restoring about $6 million per year. Together, these tax reforms create a comprehensive shift in Georgia’s tax policy that creates a modern tax code benefitting families and levels the playing field for businesses that create jobs for Georgians.
Another milestone in Georgia history reached this week in criminal justice reform by passing House Bill 1176.
Since 1990, Georgia’s prison population has more than doubled to nearly 56,000 inmates, costing the state over $1 billion annually. Georgia taxpayers are not receiving a sufficient public safety return on their corrections dollars. In fact, our recidivism rate – the proportion of inmates who are re-convicted within three years of release – has held steady at nearly 30 percent for the past decade.
The Georgia Supreme Court, Governor Deal, and the Georgia General Assembly worked together last year to create the Special Council on Criminal Justice Reform. The council found that 60 percent of all prison admissions were drug and property offenders, many of which committed non-violent crimes and had never been to prison before. With each of these offenders costing the state $49 a day in prison, it is apparent that other community-based options, such as Day Reporting Centers that cost $16 a day per offender, are a more efficient and cost-effective method for supervising non-violent offenders.
HB 1176 will concentrate prison space on violent and career criminals by strengthening penalties for serious offenders and more effectively punishing low-level drug users and property offenders. It also creates tougher, more effective probation supervision; improves community-based sentencing options, such as accountability courts, that reduce recidivism; and holds agencies accountable for better results through data collection and performance measurement systems. This bill will NOT reduce the sentences for any serious violent felonies or decriminalize or legalize any controlled substance.
HB 1176 will make Georgia’s communities safer by redirecting funds spent on incarcerating low level, petty crime offenders to more effective community-based options that cost less and produce better results. HB 1176 will save taxpayers an estimated $264 million by averting projected growth in prison costs over the next five years.
Pending next week – key legislation for consideration prior to Sine Die
HB 954 prohibits abortion beyond 20 weeks on the Senate floor Monday.
HB 797 the enabling legislation for HR 1162 state charter schools on the Senate floor Monday.
HB 824 the Quality Basic Education Act provides equalization funding for our public schools on the Senate floor Monday.
SB 98 expands locations where a firearm may be carried by a licensed law abiding citizen and is pending before the House Rules Committee.
Our 40th and final legislative day of the 2012 session, also known as Sine Die, will be Thursday, March 29, 2012. It is my great pleasure to represent you in the Georgia General Assembly and I hope to continue to do so next session.
As always, I welcome your input. Please call my capitol office at 404-656-0254 or email email@example.com if there is anything I may assist you with at the state.
Thank you for allowing me to serve as your representative,
P.O. Box 1135
Snellville, GA 30078
(404) 966-5804 cell
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