If you want to pay higher taxes, state Sen. David Shafer, the Senate president pro tem from Gwinnett County, has just the plan for you. He has proposed two amendments to the state constitution that, if approved by voters, would lead to significantly higher taxes on the vast majority of Georgia households, while sharply reducing taxes on the wealthiest.
That ought to be controversial under any circumstances. As it is, lower- and middle-income Georgia households already pay a significantly higher percentage of their income in state and local taxes than do the wealthy. The Shafer amendments would make that disparity considerably worse.
First, let’s take a look at the current disparity. According to a study of state tax structures by the Institute on Taxation and Economic Policy, middle-class Georgians — those with incomes of $15,000 to $80,000 — today pay roughly 10 percent of their income in state and local taxes. In contrast, the top 1 percent — with an average income of $983,000 — pay less than 5 percent of their income. That’s barely half the rate paid by lower-income Georgians.
The reason for that disparity is clear. Unlike the federal government, Georgia raises roughly a third of its revenue from the sales tax, and the sales tax always hits the poor and middle class much harder than it does the wealthy.
Again, the ITEP report documents the disparity. The richest 1 percent of Georgia households today pay just 0.8 percent of their income through the state sales tax and excise taxes. In contrast, the sales tax takes 4 to 6 percent of the income of middle-class households, because unlike the wealthy they tend to spend most of their income, and they tend to spend it on taxable items rather than services.
By “creating a pathway” to higher sales taxes, as Shafer put it, his proposals would take an even larger bite out of the paychecks of lower-income and middle-income Georgians. It would make the current system even more imbalanced than it already is.
In an interview this week, however, Shafer shrugged off that critique and defended the proposals. “I just think it’s better to tax consumption rather than tax productivity,” he said. “It’s a philosophical question.”
Senate Resolutions 412 and 415 would also write another important shift into the state constitution. Under those proposed amendments, future state legislatures would be forbidden in most cases to raise either the sales or income tax to generate new revenue.
“Tax caps force governments to make smarter decisions,” Shafer said. “They force legislators to focus on essential services.”
Shafer and other legislators have decided that in the current environment, raising state taxes is not necessary and would even be counterproductive. That is their right as representatives of the people; it is the kind of decision that they were elected to make.
But with all due respect to current officeholders, none of them has the wisdom to anticipate the problems that the Georgia General Assembly might confront in 2023, or 2033, or what steps future legislators might need to address those problems. To sit today and dictate what future legislators can or cannot do in times unknown is an act of arrogance, and it’s entirely unnecessary.
If future Georgia legislators, elected by future Georgia voters, decide that they need to raise more revenue, or if they decide that it is wrong to tax lower- and middle-income Georgians at rates twice as high as those paid by the wealthy, they ought to have the authority to act on those decisions.
– Jay Bookman