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Sen. Cecil Staton: "Eliminating the 'Marriage Penalty on Georgia Families" | Families

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Sen. Cecil Staton: "Eliminating the 'Marriage Penalty on Georgia Families"
Families, Politics
Sen. Cecil Staton: "Eliminating the 'Marriage Penalty on Georgia Families"

by Senator Cecil Staton

 

The landmark tax reform package passed during the 2012 legislative session has been touted as being good for business. Companies seeking to relocate or expand operations in Georgia will now be able to take advantage of several key incentives that reduce the corporate tax burden, promote industry growth and advance opportunity.

However, HB 386 is a bill that is also good for families. While the elimination of the vehicle ad valorem, or “birthday tax”, has received quite a bit of attention, there are several other components of the bill that will positively impact families. One in particular is the increased individual personal exemption for married couples who jointly file from $5,400 to $7,000—effectively removing the in-state “marriage penalty” for Georgians.

Both Governor Deal and the Special Council on Tax Reform and Fairness for Georgians, who suggested many of the recommendations found in HB 386, found the existing “marriage penalty” to be a heavy tax that ignores family values. A long-standing discrepancy in both state and federal tax law punishes couples filing joint returns and claiming a standard deduction and favors single filers claiming standard deductions based on the exemption amount.

Logically, it would seem that when two singles file together, the standard deduction would simply be doubled. This is not the case. The soon-to-be extinguished “marriage penalty” currently only allows for an increase of approximately 75 percent of the standard deduction. This creates an unfair loophole that allows two married individuals who jointly file only to receive a percentage of the standard deduction that an unmarried person would receive—therefore penalizing anyone who takes marital vows.  

HB 386 corrects this large discrepancy in state tax law by increasing the joint deduction to mirror that of two single filers; effectively increasing the personal exemption amount by $2,000 for couples. Although there is a difference in standard deductions and personal exemptions (a standard deduction is the dollar amount that those who choose not to itemize deductions can subtract from their income, while a personal exemption lowers income tax by claiming support for individuals and direct dependents), increasing the joint deduction corrects the problem in a very significant way.

Modernizing our tax code to reduce personal tax burdens will provide great dividends for the families that call Georgia “home.” Families will see the impact of the increased joint deduction not just in their yearly tax returns, but also in their bank accounts. This extra money could be saved for a rainy day or used to make purchases that in turn spur state economic growth. At the end of the day, it will allow married Georgians to hold on to more of their hard-earned income whether they file jointly or individually.

In the upcoming weeks, we will continue to breakdown the General Assembly’s tax package and its ability to promote job growth and place more money back into the hands of Georgia taxpayers. 

Families, Politics

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