b. Ga. Premium Tax Info

The recommendation for premium tax reductions for Comprehensive Major Medical plans will raise questions regarding the impact on Georgia tax revenues.  Below is a Georgia State analysis of several options that should be considered as a part of premoum tax reform.
 
Key Conclusions:  
1. Georgia’s effective tax rate is among the highest in the country.
2. This makes it difficult for Georgia companies to compete in other states.
3. This discourages Georgia companies from growing nationwide.
4. Only five other states tax premiums at the local level.
5. A 10 percent increase in the average insurance premium tax rate (2.34 percent to 2.57 percent)
translates into approximately a 920 job loss for the average state.

Introduction

This Policy Brief examines a number of potential changes to the premium tax in Georgia. A number of
specific changes are considered individually in order to provide an understanding of how each proposed
change affects tax revenue to the state and local governments.

The current premium tax in Georgia was enacted in 1955 and has two parts.1 The first part is a tax on
premiums that is remitted to the State of Georgia. The second component is a tax on premiums and is
collected by the State Department of Insurance on behalf of the local governments in the state. In 2009,
the state premium tax revenue was $282.6 million, approximately 2 percent of total state tax collections.
 
The first part is a tax on premiums that is remitted to the State of Georgia. The second component is a tax
on premiums and is collected by the State Department of Insurance on behalf of the local governments in the state. In 2009,
the state premium tax revenue was $282.6 million, approximately 2 percent of total state tax collections.22

Three options for reform are examined. The first concerns the elimination of the investment abatements,
which would amount to approximately $131 million in additional tax revenue, and the elimination of all other
credits, which would amount to approximately $150 million in additional tax revenue. The second option
for reform examines the effect of altering the premium tax rate for the state and local portions of the premium
tax. Four scenarios of various state and local premium tax rates are examined. For each case we provide
order of magnitude estimates of the tax revenue effect.
 
The full report can be viewed at the following link:
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