Georgia Republicans are opposing a stipulation in President Joe Biden’s $1.9 trillion coronavirus relief bill that could block states from using the federal funds to pay for tax cuts.
The sweeping relief package, named The American Rescue Plan Act of 2021, was approved by Congress on March 10 and is headed back to President Biden’s desk.
It includes a wide range of proposals such as $1,400 direct checks for many Americans, aid for state and local governments, grants for small businesses, and money for schools, with Georgia slated to receive $8.9 billion in funds.
The funds, however, also come with stipulations, including wording that prohibits states from using the funds to pay for tax breaks.
Specifically, it states, “A state or territory shall not use the funds provided under this section or transferred pursuant to this section to either directly or indirectly offset a reduction in the net tax revenue of such state of territory resulting from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit or otherwise) or delays the imposition of any tax or tax increase.”
“The $1.9 trillion blue state bailout being ran through congress without bipartisan support, like the previous aid packages, would slap Georgia with one of the biggest decreases in funding when compared to formulas used for the CARES act,” Georgia Governor Brian Kemp said at a March 10 press conference on the state’s vaccine rollout.
“It also significantly singles out many conservative states to specifically prevent any of us from using these federal funds to pass tax reform,” he added. “Democrats in Washington and in the White House are not going to tell me, or the Georgia General Assembly, that we can’t cut taxes for hard-working Georgians.”
Republican state House Speaker David Ralston wrote to the state’s congressional delegation members before Wednesday’s vote and then sent a letter to President Joe Biden once the bill had been cleared on a party-line vote.
Ralston wrote that he was especially concerned about what the federal action would mean for state legislation that would raise the standard deduction, resulting in a small tax break, and urged Congress and Biden to rework the legislation before it becomes law.
“This method of cutting taxes would benefit taxpayers who do not itemize and are generally of lower to middle incomes,” Ralston wrote. “In Georgia, we have prioritized providing tax relief to our citizens, and [the bill] appears to prohibit that relief.”
The Georgia Budget and Policy Institute (GBPI) said the tax breaks would save married couples about $63 and single people about $46. The savings would be about $75 for Georgians who are blind or disabled.
GBPI is instead urging state lawmakers to instead pursue economic payments to households through an earned income tax credit, which the organization says would cost the state about the same and deliver up to $500 per family.
“We understand and appreciate the desire to give relief to struggling Georgians by raising the standard deduction,” Danny Kanso, a policy analyst with GBPI, told the Georgia Recorder.
“However, though the bill will allow Georgians to save up to $75 per year in taxes and make a much-needed upward adjustment to the state’s low standard deduction, more is needed to move the needle for working families.”
Elsewhere during Wednesday’s press conference, Kemp criticized the funding formula used for the latest round of relief, suggesting that it shortchanges Georgia since it mostly ties funding to a state’s unemployment rate.
The Georgia Department of Labor announced Thursday that Georgia’s unemployment rate dropped 0.2 percentage points in January to reach 5.1 percent and has decreased 7.4 percentage points since the start of the pandemic.
Georgia’s January unemployment rate was 1.2 percent lower than the national unemployment rate.
The Epoch Times has contacted The White House for comment.