02/09/2026 Senate Committee on Finance

President this time. And I'll ask, Senator Halpern if you would do the invocation. Is that number 13? 12. 12.

Okay. If I get everybody's attention for invocation.

If you would bow your heads with me for a prayer. Dear Lord, thank you for another day to be at work for the people of this great state of Georgia. We thank you for the opportunity to serve. And as we do, we pray that you will allow us to have discernment, that you will allow us to listen, that you will allow us to understand. In these in these things we pray.

Amen.

Amen. Alright. We've got, a few items on the agenda today, and they all seem to be with, senator Tillery and his cosigners. So, we can go ahead. You got a preference in which order.

One of them's one of them's a little bit shorter than the other one, but Sure.

It is. Mister chairman, I'll go with the service. Do you want me to go from here?

Whatever your preference is.

I'm happy to do it from here too.

Alright. Go ahead. We'll start with, senate bill four seventy six.

Okay.

Senate bill four seventy six. I'm gonna pass these, senate dudes. If you don't mind, I'll send these this way. I think we sent one or two that way already. As you recall, the lieutenant governor appointed the senate special committee on elimination of Georgia's income tax earlier this year or actually late last year.

And we met several times over the interim to develop a plan for how we best could eliminate Georgia's income tax. As you know, I'm speaking to the choir on some of these things that you already know. Our surrounding states have already tackled this issue. The state of Tennessee has gone to zero on their state income tax. The state of Florida has done the same.

We know that North Carolina and South Carolina have laid out their plans to go to 2.99. Alabama's not really done anything, but if you go one state over to Mississippi, they've laid out a plan to go to zero in the next fourteen years. Even since we've been in session, the state of Missouri has laid out a plan to go to zero on their state income tax as well. Nine states have already done it. I told you the others that are working towards that.

Georgia would be an anomaly if we don't move in this direction, quite frankly. So through studies in all session, we we developed a plan just to help Georgia remain competitive among its other states to make a drastic change in our income tax plan as well. It's about more though than just Georgia remaining competitive. You see, what we also found out is that Georgians are having a hard time figuring out how they're paying for several things, how they're paying for gas, how they're paying for groceries, how they're paying for childcare. They've watched their power bills increase, and they now are looking and saying, hey.

If if how are we gonna make our ends meet, with record high inflation? So what our study committee did is took all of this in information in and said, while other states are walking their state income tax rate down from wherever they are to wherever they're headed, can we do something that actually helps the middle class more? And And some of you have heard me describe this already. If Georgia's income tax rate is a Subway sandwich, for many, many years, what we've done is walk the rate down. We started at 6%.

We went to 5.75. We then went to 5.49, 5.39. We now stand at 5.19%. And while we've been eating that Subway sandwich, we've been coming at it from one side. If we were to take what the committee did is said if we flip this and started eating that Subway sandwich from the other side at the same time, what would be the impact?

And what we found out is that dropping the state income tax rate the way we were moving, 1% is roughly $3,000,000,000. The state income tax brings in roughly 16,200,000,000.0. Our state income tax is roughly 5%, 5.19%. You can do the math there and see it's just over $3,000,000,000, what you're talking about. About $4.76, senator.

From the other side, if you were to raise the standard deduction and help families in the middle class the most, you also could raise that to $50,000 for an individual family or to $100,000 for someone who's married filing jointly, and the cost there each fiscal year is also $3,000,000,000. Year one's 3,000,000,000. Year two's roughly 3,000,000,000, slightly less. It ends up being $5,870,000,000 to to do that. Well, what would be the effect of raising the standard deduction to 100,000 for a married family and 50,000 for an individual?

Well, you actually end up eliminating the income tax for 64% of Georgians in year one, almost two thirds, and you provide a $5,190 tax savings for those making more than $100,000 at the same time. So what the committee did, the special, committee on elimination of the Georgia income tax, we said instead of keeping the walking this rate down, let's flip this model and come from the other side because we do think families are having a hard time paying for just necessary expenses right now. Let's give them the most benefit first in this process of eliminating Georgia's income tax completely. Four seventy six does does that. We also laid out a way to pay for this.

When the study committee met, we made it clear that we had to figure out how we were gonna cover these costs. The members of the study committee of both the minority party and the majority party made it clear that we did not wanna raise a cost that did not exist currently on groceries. We did not wanna start taxing property. Georgia doesn't tax property now. You may know that.

The property taxes all go to local government, cities, counties, and schools. And we did not want to raise the sales tax. That was last ditch effort if you thought you had to do that. We actually developed the plan. The plan you see in Senate Bill four seventy six does everything we said and does not create or raise a new tax.

So let me walk you through it here for just a second. In section one, you'll see in part one section one, they named the act. And then we adopt in section 2.1 the governor's rate reduction that he's already proposed and that we believe the house will move along with as well, dropping the state income tax rate overall from 5.19% to 4.99%. We did that as a nod to the governor to let him know this plan is not meant to be in place of his plan. It's rather to run harmoniously with his plan, and we support his effort to reduce the tax burden on Georgians.

We then decouple the state income tax from the, property or from the, corporate tax for future years. In section 2.4, you'll see we then take and raise the standard deduction from its current level of 24,000 for a family, a middle class okay. I would say that that's a, almost destitute family, 24,000 married filing jointly, to $100,000, which we think, again, puts us in line to eliminate the income tax on Middle Georgia on middle class Georgians first and to $50,000 for those who are single filing jointly. In section 3.1, we then start talking about our tax credits and say, it's three point one and three point two, that any income tax credit that exists currently that does not have a sunset will have a sunset from here going forward that will would make them end in 12/31/2031. That's how we pay for this.

As you know, you've heard me talk about it that we have roughly $30,000,000,000 in corporate welfare tax credits and exemption and sales tax exemptions. The number that

you guys, sent The

2031. That's everything you're not gonna see that we otherwise cut. But so everything now ends up with a senate's policy of a five year sunset. We found out that there were some income tax credits that have been passed before we started that sunset. It's fairly, really hard to go add that back.

This bill adds that five year sunset. Not to say that any credit specifically has to end, but it would end if it's not otherwise reauthorized by the general assembly. That's been our policy for several years now. And it sets up really accountability to make sure that those credits are still being used in a way that we think is most beneficial for Middle Georgia or middle class families. In section 4.1 is when we start cutting credits to pay for this.

We the plan doesn't pay for itself if you don't eliminate exemptions that you're already seeing many corporations take. Section 4.1 is the affordable housing project credit. We had to rename it, so it takes several pages. The reason we had to rename it and do this is because legislative council advised the credit at its time was simply a doubling of the federal tax credit. We believe that was the most generous credit we ever saw a state give for this program.

The second most generous we could find was a 50% of the federal tax credit. So what you see us do in this section 4.1 and the following pages in 4.2 is take that credit from where it was, doubling of the federal tax credit to where it's now 50% of the tax credit. Again, that still makes it, we think, the most generous in the nation, but it's not the most generous by times two. In 5.1, we go ahead and formally eliminate the GARJA tax credit. As you know, this was debated at length in this chamber in the house, probably four years ago.

At the time, we completely defunded it, and now we just go ahead and remove it from code. This is GARJA. It's the Georgia Agriculture and Rural Jobs Act. GARJA, probably inaccurately named, but it it was the GARJA credit. It is not the gate credit.

Some people are getting that confused with the sales tax exemptions that farmers get. We did not touch the gate credit at all. 5.2, 5.3, 5.4, five point five, five point six, 5.7, all eliminate special credits that are received by insurance companies. When insurance companies pay insurance premium taxes, they usually receive a dollar for dollar offset for their corporate or their, for their income tax credit that they pay the state. We've had them come talk to us about eliminating the insurance premium, tax, which now seems sort of incongruent because if we were to eliminate that income premium tax, they also would have lost their income tax credit.

I'm not sure why they would would would want that. Maybe some didn't and the right hand didn't know what the left hand was doing. But if they're they're paying that insurance premium tax usually in some instances to cities and counties, they're not that's not coming to the state. Why is the state then giving them a dollar for dollar credit for that, especially in this age where you have a lot of people questioning what's happening with insurance companies generally? Those were the sections that I read out.

There's a lot of lines there because we cut a lot of credits. But 5.2, 5.3, 5.4, 5.5, 5.6, and 5.7. Picking up in, section 5.8, 5.9, five dash ten, and five dash, five dash 10, those three relate to taxes that banks pay. Again, usually to local governments for deposit, institution taxes. When they pay those, they then get a dollar for dollar offset, it looks like, on their Georgia income tax credit.

We said, again, these are going to the local government. Why is the local the the state still funding what they're getting a credit of the local government side? If they got a issue with that tax, they should go talk to the local government about that tax, not necessarily pull it out of the state coffers. We eliminated those income tax credits as well. In 05/11, that's actually a relatively new one.

The five dash 11. Yeah. I'm just going in order, senator. So we're on page 13 if you want me to wait on you. You rev you with me?

Okay. Five dash 11, there was an extra $1,250 per job, that we started in the COVID era to allow eligible expenses for teleworking. It seems now if as we've moved past COVID, that that is probably one that if we're looking to eliminate credits to be able to reduce the income tax, it now seems that that's time frame has run. Five dash 12 centered us at line three fifteen. Personal protective equipment.

As you remember, also during COVID, we tried to start businesses as quick as we could to make masks, to make gloves, to make anything we could. So we allowed a $121,250 dollar credit on top of the jobs tax credit, which also provides a lot of, money for jobs created in our state related to creating PPE, personal protective equipment. Again, it seems like that time has run. If we're looking at reducing the income tax, that's one we recommend for repeal as well. Five dash 13, the same thing.

We were trying to push people into creating ventilators at the time, so we exempted or gave an additional tax credit of $1,250 per job for medical equipment, supplies, etcetera. Again, we've passed that age. That's why we're looking at pulling back. In five dash 14, there are credits we do for telecommunications facilities and manufacturing. We do these on a tier basis.

We rank all the counties in four tiers, the poorest counties being tier one, something in the middle being tiers twos and three, and then your most wealthy counties being tier four. What five dash 14 does is pulls back those credits in tier three and four counties. These are usually our most populous counties, the counties that we're having the hardest time providing infrastructure to, including jobs. It does bring up the question of why we would want to incentivize jobs in areas that were already having issues with infrastructure. We recommended that we pull those back in tier three and tier four counties.

Section 15 five dash fifteen and five dash 16 both relate to the Port Of Savannah. It's doing incredibly well. As you've seen the emails that we get from our ports authority telling us that even in this age of uncertainty, their port traffic has continued to increase. We continue to to be a model for the nation. Since we've now begun filling that facility, we then recommend why do we need to offer tax credits for those who will locate close by to that facility or who are increasing their port traffic.

We know that we are actually having a harder time with people now in Statesboro traveling to Savannah. They've now told us that they are traveling to Augusta for their needs because the traffic in Savannah is getting so bad. Why would we continue to offer a credit to further, create congestion in an area that we're feeling so feeling so well? Let's, push those again to places that do not have that traffic and infrastructure issue. Section five dash 17 pulls back the tax credit that we had placed previously for those folks who would want to buy an electrical vehicle charger.

Again, is that something that we need to have in the code anymore? Can we save the money on that tax credit and roll back the income tax further? I think we can. Five dash 18 is for businesses headquartered in the state. Again, same thing.

They have to in that credit, you have to offer at least 100% of the average wage of the community. And for how how much higher you go above the average wage, you can see an additional tax credit. Our committee said that's one that we likely could roll back and use that money instead to, benefit the middle class and everyday Georgians. Section five dash 19, we actually offer a credit in Georgia for the manufacturing of cigarettes for exportation. We figured that the day of that's probably gone as well, so we recommended to eliminate well, eliminate that, income tax credit.

And then five dash 20, if you're a business that purchases a car or a motor vehicle for transporting your employees, you are able to get a tax credit for the purchase of that car. Again, that's something that's probably only being used by, those in the know. We would rather make that be that those funds be available for everyday Georgians to reduce the cost that they have on gas, groceries, and childcare. In five dash twenty '1, there's a research credit. In fact, I think senator Dolezal brought this up before where some folks would go around, and it was their job to actually convince folks to switch the titles that they had of employees.

So if your employee was a secretary, you may now call her a or him a research assistant. If you did that, then you could change you could potentially see receive a research tax credit for the cost of his or her job. There's also, though, as we dug into this more, we realized there is a lot of research going on in this state at places like Gulfstream and other manufacturers. So we don't wanna cut it out completely. What we recommended instead until we can get a better handle on that is let's reduce it from a 25% credit right now for that person's job to a 12 and a half percent credit, cutting it in half.

Again, acknowledging that there are legitimate uses for this, but at the same time, questioning some that we we don't think are quite as legitimate. In section five dash 22, we recommend several sales tax exemptions for elimination as well. One is a tax credit that is used to set up clean rooms. If they are buying equipment for that clean room, they could receive an exemption on sales tax. Again, that's only in that environment.

We don't think that's fair. And then, of course, the one we talked about the most, starting at March and then again at March, Our two tax credits or two sales tax exemptions rather that are used for data centers. As you know, if you have a son, daughter, grandson, or granddaughter who is going to school at one of our state's universities or colleges tonight and you go buy them a laptop, you're gonna pay sales tax on that laptop. But if you were buying $15,000,000 worth of computer parts because you were building a data center, you were not gonna pay sales tax. That sales tax exemption started out, I believe, senator Hickman told me one time we thought it was $37,000,000 maybe a few years ago.

It's now ballooned to be over $700,000,000. That's literally 25% of what we're saying. The one year cost of of reducing everybody's income tax is zero for families making less than $100,000 cost. So we've recommended that one for elimination of those two for elimination as well. Section five dash 23 is commonly called the yacht sales tax credit.

As you know, if you bought bought single boat parts in Georgia, yachts, parts for your yacht, you did not have to pay sales tax. That code section was found at 48 dash eight dash 3.4. We recommended that you eliminate that sales tax exemption. And then section 6.1 lays out the effective dates. The income tax reduction for families and individuals would be effective starting 01/01/2027.

That means if we're able to pass this bill and if the house sees that it's a good bill as well and passes it and the governor signs it, that two thirds of Georgians would see their income tax eliminated on 01/01/2027 in literally eleven months. It also means that families making more than that $100,000 amount would see $5,190 in tax savings in 01/01/2027 in literally eleven months. The effective date for section for other sections, though, begins 07/01/2026, and that's just to stay in in line with what we've normally done with tax credits. And then the effective date for the governor's proposal to drop the state income tax from 5.19% to 4.99 cent percent is backdated to 01/01/2026, which again was a request of his administration, earlier on this year. Thank you so much for allowing me first, senators to chair this committee and bring this proposal.

I do think that this has a the biggest, the largest impact on families that we've ever seen. It puts the birth the benefit clearly with the middle class. If affordability is your concern, there is literally no argument you can make as to why this proposal does not help middle class families. And I heard you. I hear you.

I think you hear them. This is something we can do together. I hope it the bill is bipartisan already, but I hope it could be bipartisan today coming

out of this committee. Happy to answer any questions, mister chairman. Thank you, mister chair of appropriations and for leading the committee that a lot of us in here worked on together. I'll give a little filler while everybody's catching up with these bills if you need a a minute. But, you know, the Georgia income tax was started in 1929, I believe.

October 1929 is when the stock market crashed. We had the Great Depression. I'm not saying the income tax caused that by taking money from the citizens, but it was at the same time. There were no cuts in the income tax until some years ago when Jay Powell was chairing House Ways and Means, and he and I were able to get together and get a quarter percent cut. And then some years back, Sean Blackman and I put in this method that we're on now that the end game was 4.99 of that particular tax credit.

Now the governor's accelerated it a couple of times, and instead of one tenth, he's doing two tenths. He's recommending that again. But this year, we will be at the 4.99 that we all planned out. One of the things we did on that was we, flattened the tax rate out. But we wanted to make sure that we didn't do what other states had done of actually raising taxes on some people.

We wanted everybody to have a tax cut, so we quadrupled the personal exemption at the time, which meant nobody had a a, tax increase, and everybody had a tax cut from bottom to top, again, looking out for the the middle class. I guess guardia is a sore subject. But may you you bring that up, and I'm glad we didn't renew it. I think it was 2000 guardia back in 2016. '2 president pro tems ago.

I thought I had it beat, and, he got a revote and got it passed by one vote with with getting a member of the other party to vote with him on that. So, I thought that was that was one of the more egregious of them. So I don't mind repealing that as well. I do think, one other comment I wanna make so that people understand the magnitude of some of these tax credits. The two we talked about, the computer and the data center credit equal one month's state income taxes that everybody pays.

So I've got 1,400,000 small businesses, and small businesses are 99.7% of the businesses in Georgia. So why should these businesses not take that months and invest in their own business? Everybody invests in their own versus being forced to to give that. So I appreciate chairman Tillery's leadership on that.

My defense.

You're right. And and I think that's been a bipartisan issue that somebody else had a bill on that as well a couple of seats to the right of me here. Senator, is that Hickman that has his light up? Go ahead.

Thank you, mister chairman, for bringing this. You are very versed on all this, and you're very versed on the code section. I am not. I am

You're the CPA. No?

You're the CPA?

Anyway, that's true too. And I don't know I really don't I don't know. I just got I gotta just look at it. But but one of my passions of the tax credits is a rural hospital tax credit. Yes, sir.

And probably another passion would be the, private school tax credit. Are you proposing elimination of those credits in here?

So we did not eliminate them immediately, but those are two that actually did not have a sunset on them. And I don't know that both of them did. They might have had a five year sunset on one and not the other. If it did not have a sunset, we put a five year sunset on it, and we did that cart blank across any income tax credit just because that's been the policy of the senate now for

2017. 2017 is when

we started.

Twenty seventh. Right. For the past decade. So if it received any if those two received any negative treatment, the only negative retreatment they received was a sunset in five years unless otherwise renewed by the legislature, which you know has been our policy for the past ten years.

So can you provide us with a summation of those that are proposed to be eliminated versus those that have some sense?

I thought I just did, but I can read it.

Well, you did. You did. But I'm talking about something I could look at. So my

Yeah. Sure. That

Yeah. Yeah. Because I I I I I respect I I respect your knowledge on this. Please don't misunderstand me on that.

Right. But

it's just a just because because when when when we vote this thing out here, we're gonna walk out, and we're gonna have people all over Right. Talking to us about this one. And I need to know what the answer is if if if if the rural hospital tax rate is a five year sunset, I agree with that.

With with a five year sunset. Yeah. I understand. Otherwise. If you're an insurance company with a tax credit, we probably got it.

If you're a bank with a tax credit, we probably got it. If you have we're making yachts

and you

didn't wanna pay sales tax on your sales, your parts, we got you.

And the cigarette tax credits are going through.

Cigarettes for export and you had a tax credit, you probably ain't gonna have those anymore.

I totally agree with that. But but it would help me tremendously if you

can get it on. Thank you.

Alright.

Senator Gooch. Sort of in line with what senator, Hickman was asking about, can we get a list of all these the the fiscal impact of each one of these code sections that you went through so quickly?

Sure. You know what

I mean? Some of these have zero impact on the budget today. The tell me what the EV tax credit is in the budget to today. I don't know that we have one. We repealed it in 2015.

It is slightly less than $1,000,000. It does have a it does have an impact today. It actually exists for another year.

Can you go through maybe if you if you have

a list, can you send

it out to us?

Well, I can, I kept this one? But let me walk you through this too. We got a problem with a few of our numbers, and this is something that me and the chairman have gone through too. So if I tell you this number, please know I am using the low end number. The there is a discrepancy between the fiscal impact from DOR and the Department of Audits.

And usually, that runs because the audits provision runs two years in lags. So when we get the fiscal note, it will be better than what I tell you. But I wanna run you at the back end right now. If you were to look at the banks, you're talking about about $55,000,000. If you're talking about the teleworking expenses, you're talking about 3 to $4,000,000.

PPE about this

sorry? Speak get call up and speak. Okay? Am I Now I'm not clear speak if you keep getting interrupted by committee members. Okay.

The the PPE credit and job tax credit, if I push them together from the corporate side and the personal side, you're about $4,000,000. The existing manufacturing and telecom facilities in tier one and tier four counties is around $23,000,000. You have 3,000,000 that comes back in on code section 48 dash seven, dash 40.7, which again relates to the telecom phrase. The port traffic, we think, is around $6,000,000. I'm giving you the low one, not the high one.

The EV tax credit, like I told you, is right at a million dollars. The, 48 dash seven dash 40.17 quality jobs when we did the amendment, That was actually one that got struck out in in some of the discussions from the committee members, but it would have been the high end of that or the sorry. The low end of that one was $221,000,000. If a headquarters comes to your state right now is around a million dollars, making cigarettes is a million dollars. The purchase of transportation for, employees was right at a million dollars.

The research credit, if we were to cut it in half, is about $6,000,000. Data centers, and you'll see what I'm saying. I'm gonna use the $131,000,000 dollar number for it, but the number we just got on the fiscal note was over 7. It was right at 700. And then data centers, the second credit, we used 46,000,000, but the second one we got on that was also approaching that number.

The clean room of machinery, I'm gonna call it a million because I'm gonna use the low end. And then, I think that hits I think that hits most of most of the ones we were in.

Can I follow-up?

The the blue crab bait fisherman, I don't think it's much money. They they did a good job back in the nineteen sixties getting that, but, I I think that could go away as well.

Do you have an intern that could put that on a spreadsheet and provide it to us? So we'll have it

What what I'm hoping that we will also see is that we'll get the DOA, Department of Audits, and the Department of Revenues numbers and be able to figure out why those aren't the same. So can I

ask a couple more questions? Sure. The life insurance premiums that you talked about with the local governments

Yeah.

Do you have any idea what the impact of that's gonna be? Because I'm assuming all the locals will just add that to their military rate increase next year when they lose that because it's a rollback mandatory rollback now, if I'm not mistaken. So we did not end

the insurance premium tax that they received.

Thought you said you repealed it.

No, sir. They get a dollar for dollar offset on their Georgia income tax after they pay that tax to the locals. Right. The question was, as they brought that up as a they brought that up as an issue of competitiveness that they don't have to pay it elsewhere, what I'm highlighting for you is they get a dollar for dollar offset on their income tax in Georgia.

So what's the what's the note what's the impact on that to the state budget?

I need to pull that one for you separately. I apologize.

What was the other one?

The n the I can tell you, though, that if you if you total all these up, it ends up being, actually to the positive if you keep the the ends in twenty thirty one if we didn't renew some of those. But we know we're gonna renew some of those in 2031. So I've left a space to renew things like the SSO, the Less Crimes Act, the rural hospital credit. We still can renew that and still remain revenue neutral for Georgia.

I I think the the the first phase would be well more than covered with this. You know, there's a the 100,000 that that's starting out. Now I think chairman Tiller is right. Coming to 2031, it depends on what gets renewed on some of those on the revenue. Sure.

Go ahead.

Chairman, do you intend to reflect these new numbers in the proposed '27 fiscal budget that you'll be working on next month?

So you won't have to?

You'll have to reflect the income. You would not have to. So we're not gonna increase revenue to offset the

income. Taken out.

You've been on the budget for fourteen you've been on the

budget longer than I have to go out. Before we get the revenue.

You're putting it back in to pay for it, though. You'll have and you still have to acknowledge it. You'll have to recognize it as income.

No, sir. That's not how the budget works. Okay.

Alright. I think Mike twelve, was that Senator Hodges, or who's who's that? Maybe you were next. Go ahead.

Thank you. I'll come to mind. I would agree that everywhere we turn, people are telling us that affordability is a problem for them, and I appreciate that we need to try to do something for them. I have many, many questions. I might get cut off before I can ask all of them.

But the first one that I wanna ask you is this. It's my understanding that in other states that have eliminated the state income tax, that in fact, they have raised other taxes to also make up for that. And I am wondering if you know how many states with without an income tax have a higher overall tax burden than Georgia does today.

Right. Senator, I don't. But the cool thing with this plan and, actually, the brilliant thing of this plan is we don't have to worry about that because this plan delivers this answer eliminating the income tax for families of less than a $100,000 without raising a sales tax.

To follow-up on that. So it's also my understanding though that the way that our tax, brackets are written right now, it's kinda more distributive. Right? So people who are already people who make less money are actually paying relatively little at already in state income tax, and then it progressively goes up based on what

you earn.

It doesn't. So Georgia has a flat income tax. So everyone is charged 5.19%.

Yes. Okay. But by eliminating that, you are in fact putting more money back into the pockets of your highest earners.

Well, let's talk about that for a second. Are you talking about on four seventy six?

I'm I'm only talking about $4.76 that you just yeah.

So on 476, what you end up doing is eliminating the income tax completely for families making less than a $100,000 filing jointly. If they make more than a $100,000, they will still pay taxes, but they will pay taxes less the income tax on the first 100,000, which would be a $5,190 savings at the current tax rate assuming no other deductions. So the only argument that you could make that this benefits the rich more is if paying taxes is a benefit over not paying taxes. I don't think anybody thinks that's the case.

I would agree with the idea that, of course, nobody would like to everybody would love to pay no taxes.

Right.

We still have services to deliver. We still have things that the government is expected to do that people expect us to do. Then, let me ask you this. Have you modeled at all how eliminating the income tax would affect our triple a bond rating?

Well, the first thing is four seventy six doesn't eliminate it. Right? Four seventy six eliminates the income tax on the first $100,000 for every Georgia family. If you make a gazillion dollars, you now will pay out taxes on gazillion less 100,000. If you make a million dollars, you're now only gonna pay taxes on 900,000.

If you make 70,000 because you were a teacher married to a firefighter, you now won't pay income taxes at all. But it pays for itself by eliminating corporate credits like those insurance company credits I told you about. It just puts people over companies. That's all $4.76 does.

Yes. And then there's 477. Okay. We'll stick with four 76.

Well, if I can only get you vote on four seventy six, I'll take half the cake. I I I understand that my 50% friend is only my 50% enemy.

But, you wanna you wanna ponder that and go to somebody else? Yep. Senator Hodges, I think you were next. Or who who was is that you? I'm not

gonna be able.

Okay. Go ahead. Okay.

Senator, thank you for this. And I don't listen very quickly. I don't I certainly don't listen as as fast as you talk sometime. But just if you would Yeah. On the on the housing tax credit Yes, sir.

I listened to you. What I wrote down was that, basically, what you did was we were at, a qualifying tax credit with incomes two times the the, federal medium, and you dropped it to 50 to 50%.

No, sir. It's different on that credit. You want me to walk you through that credit?

Please, if you would.

So And

also tell me what the effect is. I didn't

I didn't get that dollar amount. And there is a federal tax credit for developers who develop low income housing. Yeah. Absolutely. There when the feds have a program, sometimes states will also create a program, and the states are very desperate on how they implement it.

Maybe it's 10% of the federal credit. Maybe it's 20. Most I won't say most. I'll say that the most generous we found outside of Georgia was 50% of the federal tax credit. Georgia actually offered you could get the federal credit, a 100% of the federal credit, and then you could get 100% of the amount of the federal credit as a state credit.

What this bill does, it says, we're only gonna allow you to get 50% of what you got on the federal side as a state credit as well. Mainly, it's an acknowledgment that the state income tax is 5.19%, and your federal income tax rate's 20 something percent. So the and if if someone corrects me later, they're more than welcome to do so, but we could not find a state that was more generous than the 50% number other than Georgia. We were an outlier. And rather than eliminate the credit completely as we did with over a dozen credits as you saw, we said, let's move this to the 50% that we've seen other states set up.

And and did you come up with the dollar amount effect?

I will have to give you that dollar amount. I apologize. I pulled up.

The whole program is about $7,700,000,000, and so it would be half of that if you cut back to

And that depends on if you're reading the the DOR report or the DOR report. The DOR report, I think, puts the total at 400. Right. So we're either at 200 or 400.

Okay. Thanks. Oh, and that one, we did have a study on a few years back, couple of three years back, that showed we were way more generous, and they couldn't find any correlation in that study. And there's people who'll always disagree with studies, but they couldn't find any correlation with with that extra 50% and get more housing built. It just seemed like it was going to the developers.

And, you know, only 20% of these and if at a certain income, only 20% of them have to be for low income. Other other 80% can be unchecked. So, it's a it's a program we looked down on this committee in the past.

And and let me clarify something. I said, mister chairman, I'd what I meant to say was that I listen very slowly, not that you talk fast.

Okay? I'm pretty guilty of that.

Thank you. I think, senator Rhett, you're next.

I have two quick questions. Okay. Today, I I didn't I got on my dollar store glasses, and I was looking through here for a fiscal note. And I was wondering, do we have access to a fiscal note pertaining to this bill?

We've got we've got one requested that we don't have yet, and we will we'll certainly get it, shortly. But we, we know these credits add up to the point where it would more than than pay for this cut.

And the only other question is since we're starting the bill here in the senate, I I assume it wouldn't be considered a revenue bill.

Senator, you bring up a good point. In fact, if you'd like to help us with that later, I'll take that that motion from you. I think we got a plan on that one.

Got a plan.

Yeah. Alright. Senator Harbin or your number which one are you? Did you have a question? 10.

10. Okay. Go ahead.

Alright. Senator Tillery, thank you. Great job, senator Hufstedler, for what you're doing and the work that you're doing here. I noticed you're 5.7 dealing with life insurance companies. Georgia does not have a lot of life insurance companies that are domiciled in the state.

Am I correct? And one of the reasons that is true is because of the tax environment that is here for insurance companies, specifically life insurance companies. Am I correct?

I I don't know the reason, but I could tell you that when we had this exemption here, they weren't coming. So why would do in a way that exemption make them come more?

Understood. The other part I think is this. I I would say we live in a a a society of I'm gonna call them tax ticks. They are ticks all over your body. They're ticks taxing you in multiple places.

You just gotta pull one off and start. Premium taxes are also here. Part of that goes to the state. Part of that goes to the counties or cities as far as that portion. The consideration is that we complain about premiums being higher, and yet we have the ability.

Could we look at even eliminating the tax on insurance premiums to lower the to lower the premiums for the citizens? That's another way that we could look at it. I don't know if that's been looked at it or not. That was just a thought.

It's not something that we looked at in this bill, but if if there was a requirement that those are dollar for dollar rollback on premiums, I think you'd probably see a lot of support in this body.

Okay. Other part is on the data centers as far as that portion. And and I and I'm from testimonies from the last time we were here. Once these are completed, the data centers are completed and equipment is replaced, the time period of that was on the existing ones is, what, twenty, twenty thirty two, something like that. Am I correct?

I think there's two different credits that run out at two different times. K. So one runs out in 2027 and maybe one in 2032.

Yeah. The end end of '31 on the on the data centers and the '27 on the, computer equipment.

K. So that when they are replacing their equipment, there's gonna be a jump in our revenue as a state once that goes away. And I'm assuming that future data centers we're looking at that is not giving quite as long of a range of credits. Am I am I correct on that, or is that what

you're doing? Because the the the University of Georgia, Carl Vince, said that at least 70% of them would have come anyway that we're giving our money away. And like I said earlier, that's one one whole month of income taxes to give a a small group that credit.

I think once they've spent the millions and billions of dollars, that little bit of difference from the standpoint of the sales tax to replace equipment is not gonna affect whether they stay or go. But, great job. Appreciate it.

Alright. Senator Orrock, you're up next.

Thank you, mister chair. I I have, several questions. Number one, we're we're proceeding to put this is this bill up for a vote today in committee?

Certainly, it's eligible for for a vote in the committee.

Eligible for a vote. But but but we don't have a fiscal note.

What what

we Kinda mind boggling.

K.

But that's that's accurate. It could be voted on the day, but we have no fiscal note in front of us.

Senator, we we do know that the bill more than pays for itself. It uses corporate tax credits to offer the largest tax credit ever to the middle class.

And and and the next thing is you that you you were silent in response to the question about how do how does a bill of this nature start in the Senate when revenue bills are required to start in the house?

Well, I I'll answer one too. We've had bills that I've done that they switched to a house bill to satisfy them. I don't think that's constitutional. I'll go back to 2010 when the senate majority leader, Chip Rogers, at the time, the the last big tax bill

I remember him.

Was under a senate bill under his name. I don't think that's constitutional, but at the same time, he's got a plan for if they insist on that.

He's got a plan for it.

Put under a house bill.

Trust me? I promise.

No. No, ma'am. I won't let you leave this room without doing the same thing.

I'm sorry. I'm sorry.

You'll see the plan today.

Oh, but we haven't seen it yet?

Well, it's just basically putting it on a house bill. We've got a bill from chairman Blackman and a bill from Beth Camp that are house bills that will satisfy.

Bill building good working ties with the other chamber. That's that's wonderful.

Senator, if they don't wanna reduce the income tax for hardworking Georgians, then I don't wanna work with them. But I think they do because we talked with them already, and they hear the same thing that you're hearing. You have been a champion for folks for the middle class. But today, you're gonna get given a bill that is gonna give you the opportunity to reduce the income tax for families making less than a $100,000. And the only group that does poorly under this are corporate big businesses.

The AJC just listed its winners and losers as we've been sitting in this room and said the winners are individuals making less than 50,000. The winners are families making less than 100,000. The losers, they said this, not me, is big business. I'll throw me in that briar patch every day. Okay.

I wanna fight for the folks who are trying to make Georgia better.

Well

And on on March the other day, the the senator from Savannah said that, why weren't we working on corporate welfare? This bill doesn't

exactly senators from the Savannah, so

I haven't

thought fault. Yeah. Senator, I I I I I think the truth about this bill is that the rate reduction favors the wealthy. The rate reduction favors the wealthy.

Senator, the rate reduction in this bill reduces the top end rate from 5.19% to 4.99%. It's a 40 basis point reduction. You're talking about if I'm doing the math in my head, you're talking about around a billion dollars total for the state. Instead, what you're doing for those who are making less than 500,000 or less than a $100,000 is you're giving them and the folks who are making slightly more a $5,870,000,000 income tax reduction.

But but why would we structure this to give a rate reduction to the wealthy? They need to be play paying taxes.

Senator, you're you're a Yeah. The rate reduction is coming anyway Mhmm. From from the the governor's office of the 4.99. But this this is the addition of a $100,000 exemption, which will help out the poor and the middle class.

If if you vote against this bill, you're gonna have to explain to someone that you voted against eliminating the income tax for families making less than 50,000 or for individuals individuals making less than 50,000 and families making less than a 100,000.

But there might be other bills that could do that without doing some of the

Alright. We gotta we gotta keep moving. It. We we gotta we gotta move. I'm I'm sorry, but we're we're let's see.

Senator Dolezal, you were next. I've got another committee that might wanna come in here, so I'm gonna tell them they can't. But, I'll Thank

you, chairman. Chairman Taylor, walk me through, if you can, on the credit side. I heard about one point, just rough numbers, 1,500,000,000.0 or so, 1.5, 1.6.

I'm using the low end numbers from one of our folks. We we actually think that it's higher than that. You're talking about needing to do a standard rate a standard income deduction of 50,000 for individuals and for a 100,000 for families, $3,000,000,000. I think the credits are gonna total out to be closer than that. If you actually use the $20.31, elimination overall, you're gonna be well over that number.

So we're gonna have space to put tax credits back in that we think are beneficial, like the ones that senator Hickman mentioned about rural hospitals, less crimes act, etcetera, that aren't gonna expire, by the way, that we can renew those and will still be within our cost.

So 3,000,000,000 for the the Right. The standard deduction. Standard deduction. What's the cost for the rate reduction on the corporate and individual?

That that's gonna be not quite a billion, but close.

Okay. So we'll call 4,000,000,000 total. Yeah. Walk me through the the only thing I'm confused about with this is I'm hearing about 1.5 to two. Yeah.

We we You think it's closer to three?

Yeah. We do not pay for the governor's reduction that he proposed. Got it. We believe that that's built into the governor's revenue estimate already. We paid for our $3,000,000,000 walk down of 50,000, eliminating the income tax on individuals making 50 and families making a 100,000.

Got it. And the only people left paying taxes in this plan are people making

More than a $200,000. And they receive a $5,190 cost savings, other tax credits being being what they are. So there is a chance if you're making 150,000 and you've got children, you're gonna pile on your child tax credits or what you received because you made a donation to rural health rural hospitals that you also would see your income tax be zero.

Alright. Senator Steele, we've got two more members. We'll let some, then we're gonna look at some action. Go ahead, senator Steele.

Thank you, chairman. Chairman Tillery, I'm gonna go back to something my former suite mate said about listening, slowly, than than you're talking. Can just because I don't know what these tax codes are, and I'm I'm just reading it and trying to wrap my head around it. On, page 15, it lists several different, amended by repealing and reserving paragraphs, and it lists out paragraphs, in code sections. Just high level overview, is there I know this is pointing back to, things previously discussed, but without trying to beat a dead horse on anything, can you just give me a quick explanation on that?

Yeah. So some of these were credits that we talked about before in the bill. Right. Is those the big ones, though, or the eliminations when you get to 36, 68, and 68.1? Those relate to the clean rooms and the data centers.

Got it. The other things that we took and did is we tried to apply, the five year sunset provision to credits that did not already have that five year sunset. Got it. So there were several. There were quite there were quite a few.

So we wanted to make sure we provided that. It doesn't eliminate them. It just stands them up for the same review by the senate that we have every other income tax credit. Perfect. Thank you.

Alright. And then our majority leader.

Hey, mister chairman. I just wanted to, thank chairman Tiller for the work. I wanna reiterate a couple of things just so for the record. I know we talked about during the committee as we were considering going through this process, three specific things that, basically, this bill does not levy a new state property tax to replace income tax. Is that not true, chairman Tillery?

That is correct.

The proposal will not raise or increase the sales tax on groceries?

It does not.

This does not create a new tax on seniors.

Unless they're buying data centers.

Yeah. That's true. I wish I knew one of them. And then the proposal will not raise the state motor fuel tax, the gas tax, to replace income tax.

It does not raise the motor fuel tax at all.

Alright. Thank you, sir.

It does not raise any sales tax. Okay.

Sandra Cowser, I don't guess you've commented yet. So

I I've been punching my button, but my light's not coming on. So I'm gonna steal our CPA tax expert's microphone. Won't take me but a second. Make sure I understand I'm gonna talk about bill four seventy seven first. Well, now let's talk about four seventy six first since numerically it comes first.

If I understand it, for any single taxpayer, right now, you get a 12,000 standard deduction. You're increasing it by 38,000.

Yes, sir.

So you're saving $1,900 per individual. And if you happen to be married, there's two of you, then it's, you know, gonna be twice that. Right? Your 100 up to a 100,000 is same as two times 50.

I think your I think your savings would actually be more, though. So you're you're taking and pulling out the current standard deduction. Okay. I'll follow follow your math on your current standard deduction.

Everybody's getting that already whether we pass this bill or not, you're not gonna pay tax on your first 12,000. Correct. So what you're helping is individuals between 12 and 50, they now pay no tax, so that saves them $1,900. And then you're getting rid of corporate, basically, tax credits and some individual tax credits to pay for that. Correct.

The other bill is the one where you reduce it another percent with 3.99. Yes, sir.

We hadn't talked about that one yet, but that's what forces you to do.

To that then. Math is the same. Everybody up to the first 50,000 saved 1,900. Anybody making more than 50,000 saves an extra percent up to whatever their income is. Correct.

So what happened to all the talking paper about zero income tax? It's just zero up to your first 50?

No, sir. The the plan for the committee is to lay out a six year plan to go to zero. Okay. What this lays out for you in April is year one and year two. What April lays out is the same that triggers in on revenue to reduce that back down to three three nine nine.

To get extra percent. So our best case scenario is we get free up to 50,000 and then down to 4% roughly.

No, sir. I think you'll see bills that continue after that as we see as revenue continues to trigger. Now what we wanted to do is be prudent because you've heard everyone across the hall say, be prudent on these things. Be prudent.

So I think this is.

Well, if you want us to be prudent, we'll be prudent. But the plan from the senate is still to be at zero in six years.

That'll take another bill to get us.

It would take another bill. But these are the April is much more aggressive than April, but they both put us on on target to eliminate the state income tax in six years.

Thank you. Good work.

Alright. I think everybody's had some comments, on the committee. We're looking at, Senate Bill four seventy six. That's LC fifty nine zero three one two. If you talk to it.

And, that bill is now eligible for a motion.

When you talk to it, and I'll tell you that later.

Alright. This is the time. Go ahead.

I'd make a motion that we, to accept s b four seventy six and, l c fifty nine zero three one two. Alright.

Did you wanna second it? Senator Gooch's second on the motion? Okay. We're at final discussion on this. All in favor of the

One one last one comment,

if you don't mind. Okay.

I mentioned it earlier. Chairman Tillery, could you provide the committee with the numbers that you went through earlier so we could have them so we know what's the code section they refer to and what they're pertaining to. Sure. Because we'll have a lot of questions on this when we leave here. We all need to be educated on it as soon as possible.

Thank you.

Mhmm. Good work. Senator Orrock.

Thank you, mister chair. The on the on the, housing, low income housing, it it's true that we have a housing crisis in Georgia. And so the the the the the the the low income housing tax credit now is not producing the housing that we need as a state. So that's a real concern for me, and I don't know how you address that.

Alright. I I I we had a study that said the additional 50% did not increase it when we looked at it in the past.

Did not

Did not increase housing, but you're right. We have a housing problem. Multi source is that Cindy Halpern, is that your number 12? Go ahead.

Just a comment that it would be great before we voted to actually have that additional information to be able to absorb it and know much better on what the code sections are you referred to, what the actual impact is on all these tax credits you want to eliminate, And especially as it relates to keeping Georgia competitive for the future, as part of our job is also to sow seeds for what the future of Georgia will be. So it motions on the table, I'd like to just make the point. It'd be, from my standpoint, better not to take a vote before we have the full information in front of us. Thank you.

Alright. I I appreciate the concerns there. Any other discussion? Seeing none, all in favor, raise your hand. One, two, three, four, five, six, seven, eight, nine, nine, four, and against.

We've got three against. Motion carries. You wanna do the companion house bill that is exactly the same as this bill, but we put under we stripped the house bill and put it in there so that that would satisfy the house requirements that it should be in a house bill.

Thank you, mister chairman. The house bill four no. It's gonna be one. The the one the first one. 134 is, we want to work with our house colleagues.

This is not something that we know they're working on property tax. As you know, property taxes are not collected by the state. A lot in the media have made a lot of fuss about that that we have to pick either property tax relief or income tax relief. That's That's simply not the case. And in an effort of good faith to show the house that we're not trying to run over any preconceived notion that only they can start, tax credit bills, not just revenue bills, that we have pulled House Bill one thirty four by representative Camp and replaced the language with the Senate bill that you just voted out, four seventy six.

And that's your questions on it would be the exact same. It's the exact same language. And I'd ask that out of an effort of good in an effort of good faith and an olive branch to our friends in the house that we, would pass this bill as well.

Senator Gooch. I I would make the motion to, do pass the substitute house bill one thirty four, which is LC fifty nine zero three one five eight or one five s. So I'm making a motion to pass. One thirty my number is zero three one five s. So

it's

a substitute. House bill one thirty four. Oh, I did them. Okay.

Do we have a second on that? I'm sorry. My mic's off. Do we have a second? Second.

Second by senator Harvin. Any discussion? If not, all in favor, raise your hand. Alright. And all opposed?

Nine to three vote again.

Can I just get that LC number one more time, mister Sherman? It's 59. What'd you say?

5903153.

That was it. Thank you.

Alright. You've got your other bill that we sorta talked about, but just go ahead.

Keeping in the sentence vein of making sure we're providing relief to Georgia families, senate bill four seventy seven adopts the governor's proposal to drop the state income tax rate. Well, it doesn't sorry. That's in our first the it takes and assumes that the governor's income tax rate bill fall passes, and then it triggers a drop from there to 4.49% in January 2027 and a four point, and to 3.99% in 01/01/2028 based upon certain revenue triggers being hit. Those revenue triggers in the past have been as revenue had to exceed 3%, year over year. We reduced that to 1%.

Again, if the state's bringing in more money, we think that money needs to roll back to middle class families when they're filling this, increased crunch of gas, groceries, and childcare.

Alright. Question, senator O'Rourke.

Thank you, mister chair, to the author. It that's line 28 that you're talking about on the on page two. Is that right?

Yes, ma'am.

The the the question I have is when we know that we have extensive waiting lists for people waiting for mental health services, developmental disability services, and physical disability services, and when we have one of the weakest Medicaid programs in the country, how, why would we do that radical thing of having a not have the the the revenue estimate, they have the governor's revenue estimate for the succeeding fiscal year is not it it it just take that 3% and reduce it take it down to 1%. Do we not do we not need revenue in this state to meet the needs of people? Because you may give me, with a bill, a a a a a cut in my taxes, but that that is not sufficient for me to stand up a system to deliver services, to children with autism, to children with dyslexia, to children with, developmental disabilities or or, that does it it it it it leaves that unfunded, doesn't it? Isn't that what we're doing here?

Again, I I would argue to you if the state's bringing in more revenue, that that revenue can best be spent by the people who sent it to begin with.

Well Alright. But how if I could follow-up with one question, how does that person stand up a system to deliver services for for, a a child with intellectual or developmental disabilities? That that little tax cut to that individual taxpayer does not allow them to purchase those services. So it leaves our state failing to provide services for which we have extensive waiting lists. Isn't that the case?

Well,

senator, you just called this a little tax cut. The bill before eliminated that person's income tax completely, and you voted against it. So I don't think you're gonna vote for this one.

Well, I didn't that wasn't my question whether I was gonna vote for it or not. My question is, why are we creating tax cuts, under the under the guise of of relieving our middle class when in fact, we're not funding the needs of those families that are on those waiting lists. And they've been on those waiting lists for decades.

Senator, we've put over $2,000,000,000 into the DBHDD system in the time that I've been chairman.

Uh-huh.

We have not neglected those needs. We are continuing to address those needs. You will see the senate the house budget that's coming over to us that we're working now in building more state hospitals to try to relieve alleviate prison overcrowding that we're seeing because people have been found incompetent. We are working hard

to meet example of high needs

the needs of our state.

System. The correction

But, senator, you and I just have a simple difference in philosophy. You think the government can spend people's money better than they can? And I think people can spend their money

I think the government can I think the government can do a better job of creating infrastructure to deliver services that families all across the state need than an individual can with their, tax deduction?

Alright. I I I know the senator's passion. I think you've made your point, and and we certainly respect it. Senator Hickman, did or is that senator Kauser?

Mister chairman, with chair permission,

I think we've pretty thoroughly discovered income discussed the income tax rates, the impact, and the fiscal impact. With your permission, I would move due pass on Senate Bill four seven seven, LC fifty nine zero three one one.

Alright. We've got a a motion by senator, Kauser, a second by senator Steele. Any further discussion? All in favor, raise your hand. All opposed, nine three vote again.

And then I imagine you wanna do this with the House bill too, don't you?

Yes, sir, mister chairman. You'd see House bill four sixty three is also a bill that's in our committee. As we discussed previously, the house, often tells us that tax cut bills are also revenue bills, even though they seem to be the antithesis of revenue bills. So we, in an effort to defer to them, we would like to take and place the language that we just passed in house senate bill four seventy seven on house bill four thirty four sixty three as a committee sub. It's LC59Dash01, 0316S.

Alright. We got a motion on that from senator Gucci, I believe.

Motion. Second.

Second from our majority leader. All in favor, raise your hand. All opposed. Alright. Nine to three vote.

Motion carries. That's all the business for today. We ran slightly over.

Good job.

It'll be senator Taylor. Yeah. Meeting adjourned.