ATLANTA — House Republicans are going after a tax credit that benefits the poor and senior citizens as they try to soak up little pools of revenue to balance the state budget.
The change, which passed a key committee at the state Capitol earlier this week, would do away with the refundable portion of the state’s low income tax credit.
This is basically the state version of the earned income tax credit. Some people who don’t have enough income to pay income taxes get a refund check from the state anyway because of the credit.
“They paid in zero income taxes ... and the state wrote them a check,” said state Rep. David Knight, R-Griffin, who is a sponsor of House Bill 1219, which would do away with the credit.
The change would bring in about $22 million for the state next year.
That’s not a huge chunk of the $1-billion-plus state leaders are looking for in new revenues and budget cuts to balance the fiscal 2011 budget, but it’s a step in that direction.
Democrats have complained about the change, and four of them voted against Knight’s bill Monday. But with Republican support the bill easily passed the House’s tax-code committee, Ways and Means, in a 14-4 vote. It could make it to the House floor this week and will need to pass both the full House and Senate to take effect.
The Georgia Budget and Policy Institute, a watchdog group that has repeatedly argued for tax increases on the wealthy to help Georgia weather its budget crisis, quickly came out against the change. The credit helps Georgians with incomes below $20,000, with extra benefits for senior citizens and families with children, the institute said.
The institute suggested changing the “generous caps” on taxes for retired senior citizens “if lawmakers wish to draw additional tax revenues from seniors.” The institute said the tax credit is meant to offset some of the sales taxes poor people pay, since those taxes take up a larger percentage of their income than they do for wealthy people.
But Knight said the credit was put in place to offset the state sales tax on groceries. That sales tax was taken off the books in the mid-1990s.
State Rep. Allen Peake, R-Macon, and a member of the Ways and Means Committee, said doing away with the tax credit “makes logical sense.”
State Rep. Larry O’Neal, R-Warner Robins, who is the committee chairman, called the credit “essentially welfare.” He noted that low-income taxpayers will still get the taxes they pay back in a refund, but they won’t “get any extra money” like they do now.
To contact writer Travis Fain call 361-2702.
