The Atlanta Lawyer April 2012 | Page 18

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. [email protected] 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