Joe: Welcome to the card game, Ed.
Ed: Sorry I’m late, guys. I was just going over some of the changes the Georgia state legislature made this year in HB 386, the tax reform bill.
Bob: I heard about that. That was something they came up with during the final days of the session, wasn’t it?
Ed: Oh, no. They’ve been working on this for over 2 years- ever since the Tax Council, which was created in 2010 and made up of business and economic experts in our state, made their recommendations to the Special Joint Legislative Tax Committee.
Frank: I remember that. Sonny Perdue was still Governor and that Council held meetings across the state taking suggestions from citizens on how to make Georgia’s tax code friendlier and more attractive to employers.
Ed: That’s right. They tried to present a tax proposal that would help create jobs and move Georgia towards a fairer and more economically attractive tax structure for private citizens and businesses alike.
Joe: Are all of the Tax Council’s recommendations included in this tax reform bill?
Ed: No, not everything. For instance the Tax Council recommended putting taxes back on groceries and increasing the tobacco tax. The legislature and Governor Deal considered those things but there was too much opposition at this time and they didn’t get included in the final bill.
Bob: So does that mean that the things recommended by the Tax Council that didn’t get included this time are dead now?
Ed: No, not necessarily. Keep in mind that beneficial tax reform comes in measured, well thought-out steps. This tax reform package lays the foundation for the future of tax reform in Georgia. It’s one step in the right direction- many will follow in the years to come.
Frank: Was anything included in this bill that was not part of the Tax Council’s recommendations?
Ed: Yes. Starting July 1, 2012, the sale of jet fuel to airlines is exempt from 1 percent of the 4 percent state sales and use tax.
Joe: Sounds like another break for big business, if you ask me.
Ed: No, not really. If the price of fuel is lower in Georgia it makes Georgia look more attractive for airlines to refuel here- helping bring in business for all of Georgia’s airports. If airports bring in more traffic, the more jobs will need to be created.
Bob: So the tax reform bill was as much about creating jobs as it was about cutting taxes?
Ed: That’s right.
Frank: Yeah, but if we’re giving a break to big business like the airlines, how is this tax reform saving us citizens money?
Ed: Remember, this tax reform bill includes a lot of different pieces. The jet fuel exemption is only a part of the total package. When it’s all said and done, businesses in Georgia will save over $161 million in taxes over the next 3 years, while individuals will save over $101 million.
Joe: Yeah, I heard about the ad valorem or “birthday” tax on automobiles going away, what else is changing in this bill?
Ed: Well, all of us here are married and the bill does away with the marriage penalty in our income tax code by cutting income taxes for married couples.
Bob: All right! Now you’re talking! I’ve always thought it was unfair for married joint filers to have to pay more than single filers.
Ed: So did the legislature. That’s why they increased the personal exemption for married couples by $2000/year from $5400 to $7400. That puts $362 million into the pockets of married couples over the next 3 years and equals the playing field between married and single filers.
Frank: So what about senior citizens like my wife and me?
Ed: This is not a tax increase for seniors. No one who is currently taking exclusions is affected. The bill simply caps the retirement income exclusion for seniors at the current level of $65,000 or $130,000 per couple. This is one of the highest in the nation.
Joe: Are there other parts to the bill?
Ed: Yes, but we’ll have to talk about them later. We need to play some cards now.
Bob: Yeah. I’ll start. Ed, you got any 3’s?
Ed: Nope. Go fish.