Georgia has an opposite direction of tax burdens at the federal and state levels

Senator Raphael Warnock elbows Stacey Abrams during a campaign rally with the United States … [+] President-elect Joe Biden (Photo by Drew Angerer/Getty Images)

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As Congress prepares to raise hundreds of billions of dollars in federal taxes under the Inflation Reduction Act (IRA), it has not gone unnoticed that lawmakers in many state capitals are doing the opposite and enacting tax breaks. “Widespread tax breaks in the country’s statehouses contrast with what’s happening in Washington,” Bloomberg reported Aug. 9, adding that nearly “two dozen states have cut personal or corporate income tax rates in the last two years and more than a dozen have enacted temporary relief in 2022.”

In addition to lowering the income tax burden, there has been a recent trend of states moving from progressive to flat personal income tax rates. Georgia was among the states that passed legislation introducing a flat tax in 2022. The income tax cut signed in April by Gov. Brian Kemp (R-Ga.) that will take Georgia from a progressive income tax law with a top rate of 5.75% to a flat income tax of 4.99% over the next seven years was signed with the enacted in support of most Democrats in the Georgia Legislature. In fact, of the 99 Democrats in the Georgia House and Senate, 84 voted in favor of the income tax cut.

“Many of my caucus colleagues voted no to this bill, but once the bill is improved, many of us will vote yes to give Georgians hard-earned money back,” said Georgia House Minority Whip David Wilkerson (D). why most democrats voted for the flat tax.

Georgia highlights how income tax cuts are being passed in state capitals with support from both Democrats and Republicans. The two US senators from the Peach State, meanwhile, are demonstrating how federal lawmakers are doing the opposite by increasing the tax burden on party-line votes.

Just months after Georgia Democrats and Republicans united to relieve budgets of all income brackets, Senators Raphael Warnock (D-Ga.) and Jon Ossoff (D-Ga.) voted in favor of the IRA, which did not receive a single one republican vote. The IRA didn’t get GOP votes in large part because the bill will result in a higher federal tax burden for households at almost all income levels, including those earning less than $10,000, according to analysis by the bipartisan Joint Committee on Taxation. It’s counterintuitive, but the same state where most Democratic lawmakers recently joined Republicans in cutting and flattening the state income tax is now represented in the US Senate by two men casting the deciding votes, by hundreds of billions Dollars in higher federal taxes in the midst of the highest rate of inflation in four decades.

In addition to voting for tax increases that will hit millions of households earning well under $400,000, breaking President Biden’s oft-repeated tax promise, Senators Warnock and Ossoff also voted to hire 87,000 new IRS employees finance. That’s enough new IRS employees to fill Mercedes-Benz Stadium, home of the Atlanta Falcons, to capacity and still have more than 16,000 agents waiting outside who can’t get inside.

Stacey Abrams attacked a Senator-backed balloon of a federal tax case but is about to hit Biden’s desk on massive tax hikes

Stacey Abrams, the Democratic nominee running for Governor Kemp this November, has not said if she supports the IRA. But does a state-level applicant really have to weigh a federal tax proposal? It’s unclear if most Georgians think so, but Stacey Abrams himself certainly does.

Abrams’ silence on the hundreds of billions of dollars worth of tax increases recently passed by Senators Warnock and Ossoff contrasts with Abrams’ criticism of a 12-point policy platform launched in March by US Sen. Rick Scott (R -FL) was released. In particular, Abrams attacked one of more than 100 bullets in Scott’s platform because it sounded like it would result in a tax hike. Abrams clung to this vaguely worded piece of Senator Scott’s program and attempted to bind Governor Kemp to the proposal, although Kemp had never commented on Senator Scott’s program or indicated that he was aware of its existence.

As the Washington Post fact-checker noted at the time, “Not a single other Republican in Congress has accepted Scott’s specific tax proposal.” That didn’t stop Abrams from tying Kemp, a state-level official, to the federal policy platform of Florida’s junior senator. Abrams wants Georgians to think that Kemp supports a federal tax proposal that was never seriously considered and that Kemp never said a word about. Meanwhile, Abrams refuses to say what she thinks of the hundreds of billions of dollars in federal tax hikes her Democrats have actually passed from the Senate and will soon send to President Biden’s desk. When contacted, Abrams’ campaign declined to comment on the matter.

Critics claim the context for such a large federal tax hike is suboptimal. The IRA, expected to pass the House of Representatives on Friday, Aug. 12, will provide hundreds of billions of dollars in higher taxes after back-to-back quarters of economic contraction and at a time when federal tax revenues are on track to hit record highs , raise .

“Total revenue is up 25% in fiscal 2022,” noted William McMcBride, an economist at the Tax Foundation, of current federal tax revenue. “If this pattern continues, total federal tax revenue in fiscal 2022 will reach $5.04 trillion, or 21.0 percent of GDP — a new all-time high, both in nominal terms and as a percentage of GDP.”

Federal tax collections at record high

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While signing the state income tax cut bill in April, Gov. Kemp said the bipartisan tax reform package was “designed to put more money in the pockets of hard-working Georgians.” In contrast, the IRA, which the two Georgian senators approved in a party line vote, is supposed to flush more money into the federal coffers.

The Associated Press claimed on Aug. 7 that the bill “delivers on Biden’s promise not to levy taxes on those earning less than $400,000 a year.” The AP recently reiterated that claim, reporting Aug. 10 that “supporters of the bill did not vote for tax increases for people earning $30,000.” However, as the Joint Committee on Taxation’s distributional analysis shows, the IRA will increase the federal tax burden for tens of millions of households, not only for those earning less than $400,000, but also for those making less than $50,000 and even earn less than $10,000.

Although the JCT’s distributional analysis shows that passing the IRA will result in a higher federal tax burden, even for those on the lowest incomes, there are still those who dispute whether the president has broken his tax promise.

“There are no direct taxes on people making less than $400,000,” said Marc Goldwein, senior vice president and senior policy director at the Committee for a Responsible Federal Budget. Eric Toder, co-director of the Urban-Brookings Tax Policy Center at the Urban Institute, said, “Biden’s statement is correct if you only include changes in individual income taxes.”

But Biden didn’t limit his tax promise to just income taxes, and even an indirect tax hike still leaves households financially worse off. “The joint committee’s analysis shows that there are many people in the lower income brackets who own shares in US companies, either directly or indirectly,” added McBride of the Tax Foundation.

“The government has been very careful to point out that the ‘individual income tax rate’ would not change for anyone earning less than $400,000 a year, but everyone knows that the corporate tax burden is on workers and consumers as well as owners,” he said Senate Treasury Committee Commissar Mike Crapo (R-Idaho) said of the JCT projections. “This analysis shows that the burdens of the proposed tax increases in the reckless Democrat bill would be so significant and so pervasive across all income categories that no amount of $80,000 in temporary healthcare credits or subsidies for luxury SUVs would overcome the tax increase burdens would be felt overwhelmingly by low- and middle-income Americans.”

senateJCT Confirms Tax Costs Exponentially Outweigh Benefits | US Senator Mike Crapo from Idaho

Expect misleading reports of the IRA’s tax effects to continue to be peddled by other media outlets, the White House and Congressional Democrats. False or misleading statements by politicians or campaigns are not surprising. While it’s hard for many to understand why media outlets like the AP report such verifiable untruths about the tax implications of the IRA, it helps explain why Gallup recently found that just 16% of American adults say they are “very “a lot” or “quite a bit” have a lot” of trust in the media. That’s an all-time low, but as the IRA’s reporting shows, it’s deserved.