NFIB will continue to lobby for reform on one of the top grievances for small business owners in Georgia: state income tax.
Although this year’s legislative session has concluded, NFIB is already planning to push for a lower state income tax—or no income tax at all.
“2016 I hope will bring some serious discussion and action on tax reform,” says NFIB/Georgia state director Kyle Jackson. “A flatter, fairer and lower tax code is what we should all be working for.”
Two bills introduced in the legislature late last session aimed to take on the burdensome tax rates for small business owners. House Bill 435 introduced by Rep. B.J. Pak would lower the highest marginal rate of state income tax to 5.25 percent, down from its current level of 6 percent.
House Bill 445 by Rep. John Carson would lower the tax rate even more, bringing it down to 4.5 percent in 2016 and just 4 percent by 2018. The bill also repeals several tax credits, streamlining the process for a lower overall tax. A simplified process provides business owners more time to run their business rather than spend vital resources on following regulations and complex tax codes.
“While Georgia has done a good job attracting some large corporations, which is also good for small employers, we haven’t done enough to stimulate growth in the small business sector and cutting the income tax is a great way to do that,” Jackson says.
Many small business owners pay taxes as a pass-through business, which typically has higher tax rates compared with a corporate rate. The current tax levels hurt Georgia business in the long run.
“From a competitiveness standpoint, if you can choose to locate your business in a state with lower tax rates, it make business sense for you to do so,” Jackson adds.
In 2014, Georgia was ranked No. 36 on the Tax Foundation’s 2015 State Business Tax Climate Index. Florida reached near the top of the index, ranking No. 5, and Texas came in at No. 10. Both Florida and Texas have no state income tax, and nearby Tennessee also has a more business-friendly tax code, according to the Federation of Tax Administrators. When it came to individual state income tax, Georgia was considered No. 42 on the list with some of the highest rates in the country.
“Other states including our neighbors and competitors are actively working to reduce the tax burden on job creators and we have to do the same thing here in Georgia,” says Jackson.
NFIB will soon seek input from members on this issue.
“As a member-driven organization, we will be engaging our members to try and come up with a tax reform package that addresses the concerns and needs of small employers,” says Jackson. “Our mission is to make sure small business as a whole ends up on the winning side of any tax debate.”
