ATLANTA – State lawmakers took a step toward adopting a flat rate for income taxes on Wednesday, although the measure drew resistance from dozens of Democrats. 

The bill, sponsored by Rep. Jay Powell, R-Camilla, would tax all income at the same rate of 5.4 percent.

Right now, the state applies a graduated approach that maxes out at 6 percent. A married couple, for example, pays a 1 percent tax on their first $1,000 of income, and the rate increases from there.

“A person who is single will hit the maximum 6 percent rate by the time his income hits $7,000,” Powell said Wednesday.  “A married couple filing jointly will hit the maximum income tax rate of 6 percent by the time their income hits $10,000.”

Instead of taxing lower income at those reduced rates, Powell’s proposal would tax all income the same. It would also create a state earned-income tax credit and make other changes.

“We’re starting our day by cutting taxes on Georgians,” House Speaker David Ralston, R-Blue Ridge, said to lawmakers Wednesday morning.

But not all legislators see it that way.

As is, the proposal amounts to a tax increase for low-income Georgians without children, said House Minority Leader Stacey Abrams, D-Atlanta, who was among the 40 Democrats who voted against the bill.

“A tax cut that increases taxes on our lowest income families by giving a tax cut to the wealthier families is not an appropriate decision for the state to make,” Abrams said.

Dexter Sharper, D-Valdosta, who also voted against the bill, said he shared those concerns. 

“This benefits more of your wealthy people and not so much the blue collar workers,” he said.

About three-fourths of the benefit would go to the wealthiest 20 percent of Georgians, said Wesley Tharpe, research director at the left-leaning Georgia Budget and Policy Institute.

Tharpe said the plan also amounts to a tax increase for childless low-income Georgians because of the combination of the shift to a flat tax rate and the introduction of a state earned-income tax credit.

Powell said in a recent committee meeting that the tax credit is intended to help low-income families.

“They’re the ones who have more expensive housing costs, daycare needs so they can go to work and things of that nature,” he said.

For low-income residents without children who make about $12,000, the proposal could mean a $126 tax hike, according to Tharpe’s analysis. A single parent of two children who is also living at the poverty line, meanwhile, would save $311 on his tax bill.

That could be fixed, he said, if lawmakers pursued a more modest reduction of the 6 percent rate and continued to tax smaller amounts of income at a lower rate.

He encouraged lawmakers to keep the state’s long-held tradition to tax lower levels of income at those lower rates.

“It provides an important offset and an important enhancement to fairness to those low- and middle-income workers because they’re paying the lower rates on those first few thousand dollars of income,” Tharpe said this week.

The proposal is expected to cost the state between $20 million and $154 million a year, Tharpe said. That’s less costly than earlier tax reform proposals, he said.

Others have hailed the proposal as an economic boost.

“This would be great tax relief to hundreds of thousands of Georgia’s small businesses,” Kelly McCutchen, president and CEO of the conservative Georgia Public Policy Foundation, said at a recent committee meeting.