Three years ago, then-House Speaker Glenn Richardson announced a plan to dramatically restructure state and local tax systems by shifting much of the burden from property and income taxes onto sales taxes.
Dubbed “The GREAT Plan” by the never-modest Richardson, the proposal showed no sign of forethought, study or careful consideration. It was a hastily thrown-together effort intended mainly to raise Richardson’s conservative profile, and eventually it fell into the oblivion it deserved.
It was a path that Richardson himself later followed as well.
Since then, however, the need for a rethinking of the state’s tax system has become even more glaring. For example, hundreds of special tax breaks and deals have been written into the code over the years, unfairly exempting some from a tax burden that ought to be shared more broadly.
So this week, Lt. Gov. Casey Cagle and House Speaker David Ralston announced a different and clearly more serious approach to the challenge.
Legislation introduced Tuesday would create an 11-member “Special Council on Tax Reform and Fairness for Georgians.” The council, which would include three economists, would be asked to study the state’s current tax system and submit recommendations for change by January, in time for the next legislative session.
From there, the process gets a little complicated.
The panel’s recommendations would be submitted to a special 12-member committee comprising House and Senate members. That committee would sift through the panel’s recommendations and craft them into a final bill. That legislation would then be submitted to the House and Senate for an up-or-down vote, with no amendments permitted.
That’s an unusual way of doing business at the state Capitol, but it’s hardly unknown. A similar commission was proposed earlier this year in Washington to recommend ways of addressing the federal deficit. (It failed after seven Republicans who co-sponsored the bill in the Senate turned around and voted against it.)
The philosophy in both cases is sound. Revamping an entire tax system is a delicate balancing act. You have to ensure that the new system generates enough revenue to run government, and you have to allocate the pain of taxation across a broad range of special interests, all of which want the burden placed on someone else.
Doing that in a relatively controlled committee setting is hard enough; once you open the proposal to amendment after amendment on the floor, the whole structure would crumble under the pressure.
However, other aspects of the Georgia tax-reform proposal are more troubling.
Early indications are that the panel is being created with a goal in mind: a reduced reliance on state income taxes, capital gains taxes and corporate taxes. Of course, that lost revenue would have to be made up through other sources, most likely a higher sales tax or a sales tax on services.
If that sounds familiar, it should. That was also the approach of Richardson’s ill-fated GREAT plan.
The makeup of the panel also suggests a mission of reducing or eliminating taxes paid by business and the more affluent while shifting that burden onto the sales tax, which hits working-class and middle-class Georgians harder.
In addition to the economists, panel members would include outgoing Gov. Sonny Perdue and former U.S. Sen. Zell Miller, who also served two terms as governor. Both men bring significant knowledge and expertise to the discussion. Ralston and Cagle also would name two members each.
The other two seats would be reserved for the Georgia Chamber of Commerce and a Georgia representative of the National Federation of Independent Business.
Business groups absolutely need a seat at the table in such a discussion. They not only have a lot at stake, they too have expertise to offer. It would be foolhardy to try to revamp a tax system without their input.
However, reserved seats for two business groups — a gesture not extended to any other interest group — does send a rather eloquent message of the panels’ priorities.
Georgia’s current tax system is already business-friendly and regressive, meaning it hits lower-income groups harder. Now, a government panel created to promote “fairness for Georgians” seems likely to compound that inequity.