Georgia Could Suffer New Tax Hikes Due to Inflation, New Analysis Warns

 

Inflation could trigger tax increases in Georgia and 21 other states, according to a new analysis from the Tax Foundation, which is a Washington, D.C.-based nonprofit.

Tax brackets “fail to adjust for changes in consumer purchasing power,” according to the Tax Foundation’s report. The nonprofit described this phenomenon as “bracket creep.”

“Often overlooked, however, is what happens to state tax burdens when inflation is high. When tax brackets, the standard deduction, or personal exemptions are not inflation-adjusted, they lose value due to inflation, raising tax burdens in real terms,” according to the Tax Foundation writer Jared Walczak.

“Bracket creep occurs when more of a person’s income is in higher tax brackets because of inflation rather than higher real earnings.”

Walczak went on to say that 41 states tax wage income and 15 of those states fail to adjust brackets for inflation. Ten of those states leave their standard deduction unadjusted, while 18 have an unindexed personal exemption.

“Taken together, 22 states and the District of Columbia have at least one major unindexed provision. Thirteen states fail to index any relevant major component. (In some cases, they may forgo a standard deduction or personal exemption, but all relevant provisions are unindexed.),” Walczak wrote.

“They are Alabama, Connecticut, Delaware, Georgia, Hawaii, Kansas, Louisiana, Mississippi, New Jersey, New York, Oklahoma, Virginia, and West Virginia. The absence or insufficiency of cost-of-living adjustments in many state tax codes is always an issue, as it constitutes an unlegislated tax increase every year, cutting into wage growth and reducing return on investment. During a period of higher inflation, however, the impact is particularly significant.”

Brad Polumbo, with the Atlanta-based Foundation for Economic Education, wrote Thursday that a tax hike is “the last thing the public needs after a year-and-a-half of government-induced economic struggles.”

“It’s even more concerning that this tax hike will likely go unnoticed by many of the people it affects because of its indirect nature,” Polumbo wrote.

“Voters shouldn’t let policymakers pull a fast one. If government officials want to raise our taxes, they should, at the very least, have to vote on it and be held accountable. We shouldn’t stand for this kind of underhanded, behind-the-scenes tax hike and the concerning precedent it sets.”

U.S. Representative Buddy Carter (R-GA-01) said this month that, because of the U.S. Senate’s debt limit increase deal, inflation is about to worsen and deliver even more hardships to middle- and low-income Americans.

According to a new poll, more than 60 percent of Americans believe President Joe Biden’s policies are at least somewhat responsible for the nation’s accelerating inflation.

– – –

Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected]
Photo “Georgia Capitol Building” by Autiger CC BY-SA 2.0.

 

 

 

Related posts

Comments