The governor and House and Senate leaders on Thursday announced plans for a yearlong review of special-interest tax breaks that cost the state — and save some individuals and businesses — billions of dollars.
Gov. Brian Kemp, Lt. Gov. Burt Jones and House Speaker Jon Burns jointly announced the review — which will take place between the 2023 and 2024 sessions of the General Assembly, and they noted it will include the $900 million-a-year film tax credit, which state auditors call the most lucrative such incentive in the country.
When The Atlanta Journal-Constitution first wrote about a likely review of tax breaks in January, Statehouse lobbyists called it the “Lobbyists Full Employment Act” because businesses hire lobbyists to advocate for them.
In making the announcement, Burns said, “It is incumbent on us to ensure our tax credits continue to provide good value while keeping the tax burden on all Georgians as low as possible.”
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Jones said, “This effort is a key step in ensuring that all tax credit programs provide a sound return on investment while giving Georgians a new opportunity to consider reductions of the state income tax.”
State audit reviews that came out late last year raised new questions about whether the state is getting its money’s worth from some of the tax breaks that lobbyists helped push through the General Assembly with the promise that they’d create jobs.
The reviews found that in some cases, most of the jobs credited to the state tax breaks would have been created even without the credits or exemptions.
In the Senate, some leaders say they’d like to use any savings to further reduce income taxes on Georgians.
“I am highly in favor of eliminating special-interest tax breaks to reduce taxes for everybody,” Senate Appropriations Chairman Blake Tillery, R-Vidalia, said earlier in the session.
But House Ways and Means Chairman Shaw Blackmon, R-Bonaire, whose panel is where tax breaks commonly start, said lawmakers need to be careful not to eliminate incentives for businesses to create jobs.
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“I think obviously we want to work with our leadership to make sure that Georgia is getting the best bang for the buck,” Blackmon said. “That doesn’t necessarily mean you eliminate all or parts of our credits or exemptions.”
The House and Senate passed legislation in 2021 that was a first step toward greater accountability: allowing the chairmen of the tax-writing committees to request reviews of a limited number of tax breaks each year.
Currently, such tax breaks often occur after supporters provide testimony or data from industry lobbyists or other parties that would benefit from them. Those advocates typically tell lawmakers the tax break will create or save jobs, and legislators give the OK.
Businesses hire lobbyists specifically to get such tax breaks passed because they can mean millions of dollars to a company.
Many times tax breaks pass in the final hours of a legislative session, when lawmakers are taking hundreds of votes and have little time to review what they are voting on.
Eliminating or even cutting back on such tax breaks once they are approved is extremely difficult because lobbyists push to keep them by maintaining that they’ve created jobs or provided huge benefits to the state.
But the effectiveness of some tax breaks was questioned anew late last year by a series of reviews released by the state auditor’s office.
The review of a 32-year-old jobs tax credit that cost $120 million in 2019 found that only 11% of jobs for which companies got the credits were created because of the breaks, which were designed to increase employment largely in rural Georgia. The tax credits provide for jobs in certain industries, with the amounts ranging from $750 to $3,500 per job created per year for up to five years.
Another review looking at a low-income housing tax credit found much the same thing, that most of the economic activity would have happened without a state tax break.
One incentive for capping or eliminating tax breaks, officials say, is that it could save money that the state could use to reduce income tax rates, a top goal of House and Senate leaders.
The General Assembly last year approved gradually lowering state income tax rates from 5.75% to 4.99% by the end of the decade.
Jones, a former state senator, wants to eliminate the state income tax, something that would be difficult today because it is the largest source of revenue to pay for everything from K-12 and university education and public health care programs to the Georgia State Patrol, prisons and parks.
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