Georgia’s roads and bridges are crumbling, in part because we are 49th in the country in per capita spending on transportation.
With our school system also one of the worst in the nation by many measures, we’re crowding more and more students into classrooms, with teacher furloughs and shortened school years required to make ends meet. We also lack the resources to provide basic human services, such as a trauma care network standard in many states, that would save the lives of an estimated 700 Georgians each year.
Times are tough. But with state tax revenues already ravaged by a deep recession, they aren’t tough enough to discourage our state legislators from proposing a new $220 million tax cut, with most of the benefits directed toward those Georgians who are already doing well:
“House Majority Leader Larry O’Neal, R-Bonaire, said the loss of revenue to the state is not without risk. But he said the plan, which he described as a state-level re-creation of President Ronald Reagan’s cut to the federal tax rate in 1981, would put the state in the forefront of the economic recovery.
“It’s an incredible balance, but the goose that laid the golden egg in America is free markets and capitalism,” he said. “The first [goal] is to make Georgia the most attractive place for the entrepreneurial spirit.”
As O’Neal acknowledges, his approach is “not without risk.” Before undertaking that risk, it sure would be great if we could study the experience of a state that had already slashed its taxes to the bone in an effort to make itself more attractive to business. By studying what happened there, we could get a pretty good idea of what to expect from this latest plan.
The good news is, such a state exists. The bad news is, that state is Georgia. Take a look at the numbers below, compiled by Georgia State University’s Fiscal Research Center:
– Between 1989 and 2010, revenues from Georgia’s corporate income tax were slashed by 46 percent per capita.
– Between 2000 and 2010, per capita revenue collected through the personal income tax in Georgia fell by 26 percent.
– Between 2000 and 2010, per capita revenue from the sales tax fell by 31 percent.
– Overall, state-generated revenues in Georgia have fallen by 27 percent per capita over the last ten years, making Georgia the number one state in the nation in that regard.
By 2008, Georgia not only ranked last in the nation in state-generated revenue per capita, we were 18 percent below the average even among our fellow low-tax states in the Southeast.
Our neighbor to the west, Alabama, collected $617 more in state revenue per capita than Georgia. Mississippi collected $565 more per capita. South Carolina collected $566 more per capita than Georgia. In fact, as the GSU study notes, “if Georgia were to raise state and local … revenues to the Southeastern average, this would be equivalent to $2.7 billion in additional revenues.”
Given that data, if O’Neal’s theory held any water whatsoever Georgia ought to be swimming in jobs and growth. So how are we doing?
Well, our unemployment rate is 10.2 percent, well above the national average. In 1999, we ranked 21st in the country in per capita income, and were rising fast, up from 35th in 1979. Ten years later, in 2009, we had fallen back to 39th, which is worse than we ranked 30 years earlier.
For the past decade, Georgia has been losing the type of high-paying jobs attracted by good infrastructure, quality schools and an attractive quality of life, perhaps because it hasn’t been investing in good infrastructure, quality schools and an attractive quality of life.
And until 2008, the jobs we had been adding were increasingly low-wage, low-skill jobs of the sort that are most vulnerable in a recession. Once the economy tanked, those jobs disappeared as well.
Almost 150 years ago, a man by the name of William Tecumseh Sherman came to town and bragged that “I intend to make Georgia howl.” These days, we’re doing it to ourselves.
– Jay Bookman