Georgia income tax collections drastically decreased this year
Georgia’s tax collections for April decreased nearly $830 million compared to the same time last year, largely due to new legislation that allows some corporations unlimited deduction for state and local income tax.
The so-called Pass Through Entity Tax, which took effect with tax returns filed this year, permits a workaround the SALT deduction, which capped the amount taxpayers can deduct from states income and sales taxes at $10,000. Pass-through businesses can now pay an extra state tax to receive a full federal tax reduction, which is then passed to the business’ owner through a credit or income exclusion, which results in the owner getting an unlimited on their state income tax.
Most of the benefits go to those making more than $1 million a year, such as hedge fund and private equity partners, lawyers, doctors, car dealerships and other business owners. More than 30 states have passed similar laws and some analysts predict the federal government could lose more than $50 billion by 2025 as a result.