Two bills introduced early in the Georgia legislature’s current session aim to raise tax credits for donations to rural hospitals. These bills are both modifications of the tax credit law passed last year.
A bill in the Ga. House of Representatives, HB 54, seeks to raise the tax credit from 70 percent to 90 percent for individuals and corporations who donate money to rural hospitals. HB 54 also includes language mandating that rural hospitals report to the state Department of Community Health any payments made to third-party consultants for attracting donations under the tax break. This provision presumably responds to concerns about outside consultants taking a large portion of donations that were intended to benefit rural hospitals; the consulting firm at the center of this criticism has said it will donate its profits to a foundation supporting rural healthcare.
The proposed Ga. Senate bill, SB 14, would allow certain individuals to recoup a dollar-for-dollar tax credit (i.e. 100 percent) up to $10,000, for donations made to rural hospitals. This dollar-for-dollar credit would be allowable if the individual is a member of an LLC, shareholder in an “S” corporation, or partner in a partnership, provided that the credit will “only be allowed for the portion of the income on which such tax was actually paid” by the individual.
In 2016, the General Assembly passed the initial law establishing a tax credit at 70 percent for donations made to rural hospitals. Individual donors may claim 70 percent of their donation, or $2,500 per year, whichever is less, as a tax credit; while married donors filing jointly may claim 70 percent of their donation, or $5,000 per year, whichever is less. Corporations are allowed a tax credit worth up to 70 percent of their donation, or up to 75 percent of their income tax liability, whichever is less.
The tax credit has had a lukewarm reception, though. According to research by the Atlanta Journal-Constitution, only 136 taxpayers had submitted requests to the Department of Revenue for tax credits related to rural hospital donations as of January 13, 2017. These tax credits totaled $860,955 and represent less than 2 percent of what Georgia allocated in 2017 for the program. Lawmakers attribute the lack of donations to the 70 percent threshold providing insufficient incentive for taxpayers to donate.
The program follows a similar model from the education sector, the 2008 Private School Tax Credit Program. The Private School Tax Credit allows Georgia taxpayers to receive tax credits for donations made to Student Scholarship Organizations (SSOs), who then provide scholarships to parents of children who attend private schools, up to a certain maximum aggregate amount. In 2016, the $58 million in tax credits allocated for the Private School Tax Program were claimed in one day.
The Private School Tax Credit has a major difference from Georgia’s rural hospital tax credit: it is a dollar-for-dollar credit. Under the Private School Tax Credit, a person filing individually can donate and receive a tax credit for their Georgia income tax liability up to $1,000. For married tax payers filing jointly, the limit is $2,500. Similar to SB 14 amending the rural hospital tax credit, owners of pass-through entities, (LLCs, S-Corps, partnerships) may donate and receive a tax credit up to $10,000.
HB 54 is sponsored by the architect of the 2016 rural hospital tax credit, Rep. Geoff Duncan (R – Cumming), among others. Sen. Dean Burke (R – Bainbridge), who is chief medical officer at Bainbridge Memorial Hospital, is the lead sponsor of SB 14.