Voters Will Decide Whether to Cap Income Tax
As voters head the polls Tuesday, they’ll cast ballots for governor and U.S. Senate. But they’ll also be asked to weigh in on some state and local initiatives. One measure is a proposed constitutional amendment that would cap the state’s income tax rate.
The question seems like a no-brainer: who wouldn’t want to stop their taxes from going up? But is it good economics?
“I think this amendment is much more to do about politics than economics,” says
Jeff Rosensweig, an economics professor at Emory’s University Goizueta Business School. “No economic study has actually proven what its supporters claim, which is that it’s going to attract business and create jobs.”
In fact, Rosensweig says businesses are attracted to states for a lot of reasons, like quality of schools, and infrastructure. He says you could improve those things and attract business by increasing the tax rate.
“If they needed to do that, after this amendment has passed, then they have to go and change the constitution again, and that requires obviously another vote in the legislature and then presenting it to voters again," says Atlanta attorney and WABE legal analyst Page Pate.
If the amendment passes, Georgia would be the first state to amend its constitution to cap income tax. But a couple of states have passed similar measures. In 1978, California capped property tax rates. Pate says as a result, schools suffered and other problems ensued.
“A lot of people attribute the financial collapse that we saw back in the nineties in California to the legislature’s inability to respond to economic conditions,” he says.
Georgia hasn’t raised the income tax rate in over three decades.