Georgia's economy has grown to the ninth largest in the U.S. But according to a report from McKinsey & Company entitled “Expanding the economic pie in the Peach State,” “Georgia faces challenges to its growth from its uneven distribution of prosperity.”
The authors of the report see continued economic success for the state to be found in its ability to “include a greater portion of Georgia’s workforce, regions, and firms in the state’s economic success.”
In particular, the report calls for “invigorated and strengthened regions that tap into industry- or sector-specific advantages [that] could spur more than $13 billion of growth outside Atlanta. Traditionally, lawmakers try to prod economic growth with tax breaks and incentives. In Georgia though, that’s been a particularly rough area to mine."
Danny Kanso, a policy analyst for the Georgia Budget & Policy Institute, said, “An issue that Georgia has been grappling with for several years has been finding a way to deal with revenue incentives and tax breaks.”
“Outside the most prosperous areas of Atlanta, economic growth is constrained by low workforce participation and a lack of access to opportunities in high-growth sectors, which in turn leads to low growth in areas such as population and GDP,” the McKinsey report stated.
Tax breaks have been an “ongoing legislative debate,” Kanso said. “Last session there were actually two bills – SB119 and SB120 – that would have required a review of the tax code with an economic analysis.” SB120 was vetoed last session while SB119 is currently still under consideration.
Georgia is currently ranked fourth in the nation in respect to their corporate tax environment. When it comes to helping grow new business, “the state has implemented growth-funding incentives, but these efforts are limited and have not produced a significant response,” the report found.
Kanso believes that the only way to enact the types of tax breaks and incentives that could spur economic growth in the state is to “standardize a process (in the legislature) that would allow the state to have a series of metrics which they could use to measure success.”