Taxes to go up for Georgians?

Within days of his inauguration in 2003, Gov. Sonny Perdue proposed a hefty tax hike on Georgians instead of pushing the legislature to make tough choices on spending. Unfortunately, his legacy could be yet another tax hike if the legislature passes recommendations proposed by the so-called “Special Council on Tax Reform and Fairness for Georgians.” 

We all know the story, legislators are facing another budget shortfall – estimated to be just south of $2 billion. Unlike the previous two years, appropriators this year are not going to be able to rely on stimulus funds to soften the blow of declining tax revenues. And because of excessive spending during good years, budget cuts have been more difficult than they should have been. The long hangover spawned by free-wheeling spending during Georgia’s boom years continues to strengthen its hold on the Peach State. 

The proposal released last Friday by the “tax council” calls for eliminating many sales tax exemptions Georgians currently enjoy. Among the recommendations are eliminating the income tax exemptions and deductions, eliminating the sales tax exemption on groceries, new taxes on “causal sales” of automobiles, and imposing new taxes personal services – including purchases of books and music off the internet would be taxed. 

The council also recommends increasing the excise tax on tobacco to the “average of the surrounding states” – from 37 cents to 68 cents per pack. Of course, the “average of the surrounding states” skews the tax, considering that Florida’s tobacco tax, currently at $1.34 per pack, is significantly higher than any other state that borders Georgia. The next highest in the region is Tennessee, at 62 cent per pack. Smokers continue to be a target for Georgia legislators. 

At the height of the recession in 2009, there was some discussion in the legislature about eliminating the sales tax exemption on groceries. While no official estimate was ever given, a report from the Associated Press noted that this tax hike would “raise close to $1 billion a year.” However, the tax council anticipates that removing this exemption would increase taxes by $472 million – the largest single tax increase included in the council’s recommendations. 

Georgia’s personal and corporate income tax would also be reformed under the recommendations. The council calls for reducing and minimizing deductions, and gradually reducing the state’s personal income tax from 6 percent to a flat 4 percent rate by January 2014. The corporate income tax rate would reflect the personal income tax rate. 

If providing the state a “fairer” tax system means taxing nearly every aspect of our lives – from purchases at the grocery store or on the internet to buying a neighbor’s used car, then the Special Council on Tax Reform and Fairness for Georgians certainly hit the mark. 

On Monday, Americans for Tax Reform, an organization led by Grover Norquist that promotes less taxes and is famous for the Taxpayer Protection Pledge, announced its opposition to the proposal noting that the “income tax reductions amount to roughly $750 million in savings for Georgians, but tax increases on groceries, tobacco, communications services, the Internet and other services approach $2 billion.” 

Broadening the sales tax base by removing exemptions is not necessarily a bad idea. Most economists agree that having a broad tax base is sound public policy. But if the Republican-dominated General Assembly wants to take that approach, there must be corresponding tax cuts in other areas to ensure that any proposal is revenue neutral – not a massive, billion dollar tax hike, which is exactly what the council is proposing. 

At least at this point, one would have to consider the council’s report a disappointment.

- by Bob Barr, The Barr Code

57 comments Add your comment

John Barnes

January 12th, 2011
7:53 pm

Enjoy the ride. It seems some dummies in Georgia actually believed the low tax morons when they were running for office. Now its too late.

You will still remain bottom of the pile after 4 years.

eatmotacos

January 12th, 2011
8:20 pm

@ John Barnes: ” It seems some dummies in Georgia actually believed the low tax morons when they were running for office.”

Au contraire, There WILL be lower taxes, lax enforcement, lower regulations, etc., etc. etc., but not for the “unwashed” (Isackson’s term for the fools who continue to elect him and his ilk).

PayMoreToGetMore?

January 12th, 2011
9:11 pm

Hey Impeachment Bob, did you ever think that “revenue neutral” is not one of the Ten Commandments? Sometime you have to actually come up with more money (aka tax increases) to pay the bill.

Party supplies

January 13th, 2011
1:49 am

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5 Easy Pieces

January 13th, 2011
7:59 am

Look, peoples: inflation and high taxes are dead ahead. Inflatax. Yes, Inflatax. This word has been coined and derived from the Keynesian/Dale Carnegie economic model developed during the Dead Cat Bounce rally of 1932, (and the greek). If I were to use this word in a sentence, I would do so thusly: “Uncle Sam bent over and grabbed his socks, cause the corporations he bailed out are going to go full geronimo on his sorry butt.”

I know, you’re saying, “where’s the Inflatax?”. And that’s a good question…..if you were a moron.

Just kiss your money goodbye, expect 5 dollar gas, and ten dollar cigarrettes, and stfu, I’m sick of capitalist pigs complaining about the communist chinese oil consumption accelerator.

Oh don’t reach for THAT one, Keyenesian dikwipes, it’s WAY over your head.

Tracy

January 13th, 2011
6:46 pm

“jm” sounds like a proud Georgia Republican.

Someone called his Party out on the truth, he gets angry and fires back. Forget facts, forget the increased gas cost, forget the increased power bills, forget closing tax loopholes that catered to the middle class.

We’re being nickle and dimed to death by Republicans and instead of cleaning up the Party that’s suppose to be against this, just ingore it.

We’re like Detroit or New Jersey, except it’s a Republican destroying the working middle class by government burden and taxes.

AJC columnists slam tax proposal

January 13th, 2011
9:14 pm

[...] Barr, a former member of Congress, ripped into the proposal yesterday: If providing the state a “fairer” tax system means taxing nearly every aspect of our lives – [...]