section update
Tax Law Section Update
By Julian A. Fortuna
The Saylor Law Firm LLP
O
n April 19, 2012, Governor Nathan Deal signed into
law a series of major revisions to the Georgia Tax
Code. The new tax law package is estimated to
decrease state tax revenues by approximately $63 million
over the next three budget years. The primary components
of the legislation along with estimated tax revenue impacts
for the next three fiscal years are summarized below:
1. “Retirement Income” - Caps the exclusion for
retirement income (e.g. pensions, investment
income, capital gains) at $65K for individuals and
$130K for couples. Estimated revenue: $92 million.
2. “Marriage penalty” - Provides a tax cut to married
couples in Georgia by increasing the personal
exemption by $2,000 for joint filers and by $1,000
for married filing separately. Estimated cost: $363
million.
3. “Birthday Tax” - Enacts a complex reform to how
Georgia taxes automobiles. Replaces two existing
taxes (sales tax + local ad valorem) with a new 7
percent title fee charged whenever a car changes
ownership (including casual sales). Estimated
revenue $503 million.
4. “E-Fairness” - Takes a first step toward taxing
online purchases through the sales tax. Due to the
constraints imposed by federal law, this will capture
only about 5 percent of the revenue Georgia is
estimated to lose from e-commerce. Estimated
revenue: $52 million.
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6. “Consumer Sales Tax Holiday” - Allows
consumers to purchase certain items tax-free
on a few days each year for the next two years.
Estimated cost: $81 million.
7. “Sales Tax on Local Projects” - Exempts “local
projects of regional significance” (e.g. sports
stadiums) from paying sales taxes on construction
materials. Estimated cost: $42 million.
8. “Agricultural Exemptions” - Replaces various
tax preferences for agriculture with a broad new
exemption for the energy, equipment, and business
inputs used in agriculture. Estimated cost: $42
million.
9. “Sales Tax on Jet Fuel” – Reduces tax rate to 3
from 4 percent and eliminates special treatment of
Delta Airlines. Estimated cost: $55 million.
10. “Tax Incentives for Film Production” - Eliminates
the sales tax exemption for purchased or leased
equipment used in film production. Estimated
revenue: $36 million.
11. “Conservation Easement Tax Credit” – Limits
transferability of tax credits for land easements
granted to government entities or qualified
nonprofits for the purpose of conservation.
Estimated revenue: $15 million.
5. “Sales Tax on Manufacturers” - Over a four-year
phase-in, eliminates sales tax levied on the energy
used in manufacturing. Estimated cost $178 million.
18
THE ATLANTA LAWYER
April 2012
The Official News Publication of the Atlanta Bar Association