February 28, 2018

Tax Bill Might Hand the Governor's Race to Casey Cagle

Georgia Report

Lt. Gov. Casey Cagle.

As Gov. Nathan Deal, Lt. Gov. Casey Cagle, and House Speaker David Ralston faced the crowd at a capitol news conference last week, they were all grinning like Cheshire cats.

The widest grin of all may been the one sported by Cagle, and little wonder. After all, Deal was about to make an announcement that could very well wrap up the governor’s race for Cagle.

Deal, Cagle and Ralston had agreed on a bill (HB 918) that would lower Georgia’s top income tax rate from 6 percent to 5.75 percent for the 2018 tax year, and then potentially to 5.5 percent the year after, if the legislature determined it wouldn’t blow a hole in the state budget. The bill also doubles the standard deduction Georgians could take on their tax returns. For married couples filing joint returns, it would go from $3,000 to $6,000.

This was all a result of the massive federal income tax cut that Congress passed in late December, a cut that primarily benefits America’s wealthiest taxpayers. The many changes in the federal tax law had caused a major misalignment with Georgia’s tax code, creating the potential for the state to realize a windfall increase in revenue over the next five years estimated at between $3.5 billion–$5 billion.

Deal wanted to wait and see what the full effects of the federal changes were before adjusting the state tax law, but with an election year coming up, Cagle and others running for election insisted on doing something this session. In true General Assembly fashion, this complicated measure was introduced on Tuesday, rammed through committee without any real vetting, and moved on to the floor by Thursday for a vote. There was not even a fiscal note outlining the bill’s financial impact, which is usually a legal requirement for tax legislation.

Rep. Carolyn Hugley (D-Columbus) tried to remind her colleagues of what happened the last time they rushed to pass such a sloppily drafted piece of legislation. In 2012, when lawmakers changed the system of taxing the license plates on vehicles, that bill was also introduced late in the session, rushed through committee and then placed before legislators who had no time to really examine it, but were told to vote on it.

Legislators have been trying to patch holes in that vehicle tax law ever since. “We have to keep coming back year after year after year to fix it,” Hugley said. “We need to be thoughtful and take our time to learn the full impact before we make a decision.”

HB 918 is now out of the House and has been transmitted to the Senate, where perhaps senators will actually take the time to read it before they vote on it—but don’t hold your breath.

The real purpose of the bill is to give Cagle something to run on as he seeks the Republican nomination for governor. (Cagle is the favorite of the capitol establishment as the anointed successor to Deal.) Cagle can claim that he gave “hard-working Georgians” the chance to “keep more of their money in their own pockets.” That’s a potent issue for an election year, and it will make it that much more difficult for whoever wins the Democratic nomination, Stacey Evans or Stacey Abrams.