What Are We Missing in Georgia?

January 29, 2008

According to the Atlanta Journal-Constitution:

Rep. Chuck Martin (R-Alpharetta) is pushing legislation co-sponsored by leaders of both parties to make sure Georgians don’t have to pay state income taxes on the stimulus checks they might be receiving from the federal government.

The final stimulus plan hasn’t been approved by Congress, but President Bush and congressional leaders have supported putting $150 billion into the package. Under the plan, most individuals would get up to $600, couples would get $1,200 and each dependent child would bring families an extra $300.[…]

Without his bill, Martin said recipients would have to pay the 6 percent state income tax on those stimulus checks.

We’re not so sure about that. Some states allow residents to deduct federal taxes from their state taxes, so reducing federal taxes would increase state taxes. That’s why Missouri enacted a bill similar to Georgia’s back in 2001. But Georgia does not allow federal deductibility like Missouri does, so that’s not the reason.

We’ve read the text of the bill (which just adds a one-year income exclusion, without changing any other laws) and the relevant statute, and we can’t figure this out. When filing taxes, Georgia instructs filers to start with federal adjusted gross income and then subtract state deductions. The stimulus rebate check, as an advance on the 2008 tax refund, would not increase or decrease federal adjusted gross income, so why would it affect state taxes?

It may well be that Georgia legislators want to give taxpayers a one-year cut in their income tax. But if they’re doing that, they might want to get rid of the bottom five income tax rates which apply to income earned under $7,000.

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