March 21, 2006

Georgia should lead, not follow, in attracting ‘boomers’

By Senator Tim Golden  

According to the Washington-based Pew Research Center, over the next 18 years, approximately 72 million Americans will retire from their full-time jobs. At least 10 percent of them, or about 400,000 per year, will pull up their roots and purchase a retirement home in another state where it’s warmer – primarily in the South or West.

For decades, Florida and Arizona have had those markets cornered as havens for active senior lifestyles. But as the Baby Boom generation reaches its golden age, more and more states are realizing the benefits of attracting and keeping a healthy, wealthy and relatively young new breed of retirees, especially to their rural areas and small towns.

It only makes sense for states to seize the opportunity to get a slice of a pie estimated at $2.3 trillion in annual spending power. Having saved for retirement and medical needs, the seniors who move to other states ask very little in return from state or local government. They’re looking for a place to enjoy the good life.

We should be saying to them, “Why not Georgia?”

The impending nationwide population bulge among seniors is one reason the state Senate last week approved legislation that would increase the state income tax exemption for Georgians 62 and over.

Senate Resolution 1085, as first proposed by Sen. Casey Cagle (R-Chestnut Mountain), would have increased the income tax exemption for Georgians age 62-64 to their first $50,000 of annual retirement income and completely exempted those 65 and older from paying any income tax, starting in 2009. Under current law, beginning in 2008, retirees 62 and older will be exempt from paying taxes on their first $35,000 of annual income.

The Senate then adopted the amendments offered by me and Senator Doug Stoner (D-Smyrna), which raised the exemption to $75,000 for ages 62-69 and increased the age for a total exemption to 70, and, secondly, limited the income level at the first $100,000 for those 70 and older. This avoided removing some of Georgia’s wealthiest citizens from the income tax rolls all together.

Triple Crown Hometowns, a retirement development partnership serving Lowndes, Brooks and Lanier counties, has demonstrated strong support of this legislation, which will make Georgia more retiree-friendly and attractive to seniors.

These amendments to SR 1085, now under consideration in the House of Representatives, make the legislation a win-win-win deal for Georgia:

• Retirees in our state who have worked hard all their lives and now are truly on fixed incomes will get appropriate tax relief.
• Middle-class Georgia retirees and those who move in from other states will have more spending power, which in turn will boost the state’s economy, dramatically so in rural areas and small towns hit by job losses over the years.
• The wealthiest seniors will still pay their fair share of income taxes, minimizing any revenue loss to the state.

Critics of SR 1085, who have estimated the annual revenue loss between $41 million and $98 million, admit that the amendments improved the legislation and reduced the potential cost. For those who still think that cost is too high, consider this: The Florida Department of Elder Affairs estimates that in 2000, residents ages 50 and older in that state (where there is no state income tax) spent $135 billion, or $12.5 billion more than younger adults.

With even a fraction of that kind of economic boost, state and local governments would more than recoup any income tax losses through increased sales and real estate tax revenues, not to mention the positive employment impact on new home construction, service industries and virtually every segment of the economy.

Not only is this a tax relief issue, it is clearly an economic development issue for communities like ours.  I support the state’s efforts to recruit new industries to make up for Georgia’s massive job losses the past four years. But recruiting retirees who will bring their economic impact with them – with a tax incentive that represents only a small part of what the state offered one car manufacturer – seems to make at least, if not more, sense.

The competition for the Baby Boom retirees has begun. It’s time for Georgia to lead the way.  Georgia has a lot to offer, but so do many of our neighboring states. A reasonable tax incentive, like the amended SR 1085 proposes, could make the difference.

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Sen. Tim Golden, Democratic Caucus Chairman, represents the 8th District (Brooks and Lowndes Counties and parts of Cook and Thomas Counties) in the Georgia State Senate. Contact him at 121-A State Capitol, Atlanta, Ga. 30334; by phone at 404-656-7580; or by e-mail Tim.Golden@senate.ga.gov