A first step toward tax reform in Georgia
A Georgian who fixes up a historic house can file for a tax credit of up to $5,000. An employer that helps cover a worker’s transportation costs is eligible for $25 in state tax relief.
Each year Georgia grants billions of dollars in credits and exemptions for its income and sales taxes, some of them for far greater amounts than the above examples. But no one knows exactly how many billions.
No one knows how effective these credits and exemptions are in promoting their goals — that is, how many historic houses are being renovated instead of deteriorating, or workers getting rides to their jobs which they wouldn’t have gotten otherwise. No one knows how much better off we might be if we ended some of the breaks, or enhanced them, or reduced taxes in a different way.
If we’re going to have real tax reform in Georgia, we need to answer these questions.
Changes in the headline tax rates get a lot of, well, headlines. But they are only part of the policy mix, because lawmakers often carve exemptions out of our tax code.
These exceptions can improve upon the laws — such as exempting manufacturing materials from sales tax to keep our factories competitive with those in surrounding states. They can distort decision-making, with unintended negative consequences. Or they can shift the tax burden from one favored industry or group of citizens to others.
Our goal should be to have as broad a tax base as possible so that rates can be kept low, the playing field level, and the policies predictable and stable. A key to meeting that goal is knowing where the carve-outs are and whether they’re worthwhile.
But for decades, the General Assembly passed tax breaks that have stayed in the code, unquestioned.
Thankfully, the House Ways and Means Committee now requires a two-year sunset clause on any new tax exemption, and a fiscal analysis of its impact before it can be renewed. A fiscal analysis is also required of any bill that’s likely to have a budgetary impact of $500,000 or more.
These reviews can be inaccurate because they don’t account for changes in behavior — they are “static” analyses as opposed to “dynamic” ones. But a static analysis is better than no analysis. We have to start somewhere.
Some people argue that merely reviewing the exemptions will tempt lawmakers to end even the good ones, in a short-sighted cash grab. Certainly that’s a possibility. But we don’t even know whether the good exemptions are as effective as they might be — and a review could also indicate that legislators need to expand some tax breaks, or apply them more broadly.
There have been occasional reviews of exemptions. Two years ago, economists at Georgia State University estimated that state sales-tax breaks in 2006 were worth about $11 billion.
That’s a big number in a state Georgia’s size, but consider what it comprises. At least $9.5 billion of it can be justified fairly easily: hospital purchases, for example, or business-to-business sales that, if taxed, would only raise prices or push jobs out of state. So this isn’t all money for the taking. As far as I can tell, no comparable study has been done of the state’s personal and corporate income-tax exemptions.
The point is not that there’s a big pot of money out there. Reviewing a policy is not tantamount to overturning it. But without re-examining these exemptions, we don’t know whether they are good policy.
And in a tough budget environment, as the coming years will present, Georgians need to know that we’re using every dollar wisely.
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© 2009 The Atlanta Journal-Constitution
25 comments Add your comment
Shananeeeee Fananeeeee
November 6th, 2009
9:17 pm
“I promise as President I will end all income tax for seniors making less than $50,000 a year.” – Barack Obama. “You Lie” – Joe Wilson
MrLiberty
November 6th, 2009
11:14 pm
A REAL Conservative would support an end to all income taxation because it is the equivalent of slavery. Advocating in any way, the manipulation of behavior or the market through the mechanism of taxation is just plain disgusting.
Government should be the size that can sustain itself on user fees and minimal sales taxation, nothing more (and frankly, a solid argument could be made for no government whatsoever).
To support the existence of any taxation whatsoever of income is to grant the government the right to your life and your liberty. Once it is established that they have an implicit right to your income, there is ultimately no limit to how much they will take. We have already seen that in this country (under both republican and democratic congresses and presidents).
It is fine to applaud any tax cuts, but it is both irresponsible and clearly UN-CONSERVATIVE to in any way support any taxation based on financial utility as it relates to government revenue or behavior modification.
A REAL CONSERVATIVE would know that.
Michael H. Smith
November 7th, 2009
3:40 am
Mr. Liberty, you are so very full of non-sense.
Go ahead, make my weekend. Tell me exactly your so-called “solid argument” that you think can be made against the need of “any government whatsoever”. While you are at that delusional task, being a self-endowed self-proclaimed authority on what a Real Conservative is and what is Real Conservatism, you can start by explaining away this part of the Declaration of Independence, from whence our government and form of governance began:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. –That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.
Why must we always have need of a government of some sort and size? …”to secure these rights, Governments are instituted among men, deriving their just powers from the consent of the governed”.
What are these rights? … “certain unalienable rights, that among these are life, liberty and the pursuit of happiness”.
Conservatives understand fully why we will always need a government of an “efficient size” and will defend its’ just establishment and existence with every breath of our being. The only objective of a Conservative with respects to government is to limit the powers of that government to protecting “the rights of the individual” by the utmost prudent means and manner fiscally and humanly possible.
Gerald West
November 7th, 2009
6:52 am
The tax exemption situation is way out of control. A sensible, transparent income tax plan would not provide any exemptions. Persons and institutions meriting relief would be granted outright subsidies to help with their taxes.
We’ll never get anything sensible in tnis state due to the “no-tax, low-tax, less government” mentality of many citizens, and the “conversative” politicians who pander to the gullible and ignorant among us.
Michael H. Smith
November 7th, 2009
7:41 am
If we’re going to have real tax reform in Georgia, we need to answer these questions.
I will settle for an answer to this one question Kyle: Where do businesses get the money to pay business taxes?
I mean, if we’re going to have real tax reform, can we have reality speak real truth to reform honesty first?
Businesses only pass on the taxes “they so-call pay” to we the consumers of their products or services which are buried, hidden, in the purchase price of whatever we tax paying consumers buy.
Business taxes should be eliminated in real tax reform. At the very least passage of a zero-tax incentive law on businesses and corporations located in the State that is tied directly to or conditionally based upon employing U.S. citizen Georgia residents as permanent full-time employees.
Want to talk about competitiveness, attracting new business and retaining established business, getting the recovery under way and doing what Barrack Hussein Obama’s – mmm, mmm, mm, – miserable stimulus spending SPLURGE has failed to accomplish done in short order to create meaningful private sector jobs?
Willie
November 7th, 2009
10:44 am
I ask you ladies and gents–where are the green jobs? ARE they in the US or overseas? What is the cost per unit of green widgets for each consumer? I eagerly await your reply!
Joan
November 7th, 2009
10:47 am
Willie: I think the green jobs are those given to the bamboo cutters who cut it down to make the floors for those “green houses”. The expansion of bs in this country in the last few years has been phenomenal.
The Austrian Brotherhood
November 7th, 2009
11:27 am
“And in a tough budget environment, as the coming years will present, Georgians need to know that we’re using every dollar wisely.”
Good luck with that. And once that’s accomplished we can just raise taxes to 100% since we will confidently be assured that this fiat money is being “wisely used”.
Linda
November 7th, 2009
1:35 pm
Willie, the green jobs are in Wisconsin. I can’t think of another team except Green Bay that wears green uniforms, except maybe that college team that’s supposed to be frogs. We certainly don’t have any in the Southeastern Conference.
The Phantom
November 7th, 2009
9:24 pm
Mr. Liberty, I am all in favor of your ideas. And the second they become reality, I will sneak into your house with about ten armed friends and take everything you have.
Who needs government?
Michael H. Smith
November 8th, 2009
7:45 am
My apologies for the delayed response Willie, albeit, it is by far likely made sooner than anything you will get from the socialist liberal left now pushing climate control preeminently in the push for energy independence and the creation of “green jobs”.
I ask you ladies and gents–where are the green jobs?
To answer your first question this will lead to answering your second question:
ARE they in the US or overseas?
But first, it is necessary to answer these questions:
What country or countries produce the greatest number of solar cells or solar panels?
What country restricts the recovery and use of its’ own natural energy resources only to exploit the natural energy resources of other countries, relying predominately on energy resource importations to meet its’ energy needs?
China is likely to be found as the worlds leading producer of solar cells or solar panels.
Again, China will likely be found as the worlds leading producer of wind turbines used to generate electricity from the wind, with India running a close second in these categories.
Also interestingly to note, China has or soon will have a larger even greater carbon footprint than the U.S. followed by the U.S., Russia and India.
Even more deplorable than these energy related items is the fact that the U.S. is now estimated to hold the worlds most abundant amount of recoverable natural gas exceeding those of the once thought of leader in recoverable natural gas resources, Russia. Again, albeit, something that has been made little of to date is why Mr. Obama gives Brazil a U.S. taxpayer backed loan to explore and drill baby, drill for oil offshore in that country whilst touting his green energy plan for purposes of global climate control? The mind is boggled indeed to reckon that oil from Brazil is cleaner and less environmentally destructive. Of course, when a major contributor to Mr. Obama and the socialist liberal left profits from such a slimy deal, wonders of wonders a wash of money seems to make all dirty undertakings cleaner and greener but for whom should we ask, of George Soros perhaps?
TechLover
November 8th, 2009
8:17 am
Ga needs to prevent industry from writing Constitutional amendements that exempt them from taxes.
Michael H. Smith
November 8th, 2009
9:01 am
Interesting point TechLover, so what step or steps do you suggest should be taken to prevent or dissuade industry from writing constitutional amendments or laws that would exempt them from taxation?
As well, in your opinion, do businesses/corporations own government?
It is my personal opinion that as long as businesses/corporations pay taxes they will never cease to write tax legislation, in much the same way that businesses/corporations will continue to unduly finance political campaign in determining who gets elected.
Keep in mind the issue of taxation without representation and reflecting back to the very beginnings of this country, how that taxation gives “the taxed” the right of representation.
booger
November 8th, 2009
10:12 am
The refusal to allow oil companies to explore for resources in large, and promising ares of the US, is one of the most insane policies imaginable. Although it’s touted as an environmental policy, the exact opposite is actually true.
The source of oil has no impact on how much oil is used. Under our policies every drop of oil which is not produced in this country must be shipped in via tankers. There has not been a significant exploration or production accident in this country in over 35 years, and very few in the rest of the world, where safety regulations are more relaxed. During this time there has been many tanker accidents resulting in massive oil spills which do hurt the environment. Therefore, the danger to the environment is much greater shipping the oil than drilling and producing it here.
And the side benefits….thousands of high paying jobs which do not require one penny in stimulus funds.
This policy defies logic.
David Axelfraud
November 8th, 2009
6:21 pm
Not to change the subject………but…..
Nidal Malik Hasan, the Army major suspected of killing 13 people and wounding 29 others at Fort Hood, worshiped at the same mosque as two of the 9/11 terrorists.
According to the London Sunday Telegraph, Hasan attended services at the Dar al-Hijrah mosque in Great Falls, Va., in 2001 at the same time as Sept. 11 hijackers Nawaf al-Hamzi and Hani Hanjour. Funeral services for Hasan’s mother also was held at that mosque.
And yet, Obama Hussein tells us not to jump to conclusions. Wasn’t it Obama who jumped to conclusions about the white cop in Cambridge?
Something tells me Obama Hussein is a muslim.
“I will stand with the Muslims should the political winds shift in an ugly direction.” -Barrack Hussein Obama from Dreams of my father.
MMMM mmmmm mmmmm
Kicker
November 9th, 2009
8:12 am
Non partisan sunset policies and legislative review of tax breaks is something reasonable liberals and conservatives should be able to agree on. It’s an idea that unifies rather than polarizes Americans and it deserves more thoughtful feedback than what’s been posted here so far.
Churchill's MOM
November 9th, 2009
8:31 am
Good editorial..I’m off to the Annie Oakley, catch you tomorrow.
dewstarpath
November 9th, 2009
8:52 am
- I think I’ve figured David Axelfraud out.
He (or she) suffers from an impediment – not of speech,
but of thoughtful analysis of even the simplest variety,
and seeks to explain his distorted world view with insults
and data so obscure and irrelevant it would make even
the most wonkish Sunday-morning political pundit cringe.
I have a new name for this phenomenon – it’s called IVONICS.
IVONICS – (n.) 1. A portmanteau of “ivory” and “phonics”.
2. The use of extreme rhetoric in a manner that judges
every issue discussed using race or political bias to win
an argument.
Your morning jolt: Does the governor know what your doing? 'I am the governor' | Political Insider
November 9th, 2009
9:30 am
[...] Kyle Wingfield on a first step toward tax reform in Georgia. [...]
David Axelfraud
November 9th, 2009
10:16 am
dewstarpath, distorted world view? Well, I guess the good people at ABC news have a distorted world view etc… I mean, I did post comments from their website.
Officials: U.S. Aware of Hasan Efforts to Contact al Qaeda
Army Major in Fort Hood Massacre Used ‘Electronic Means’ to Connect with Terrorists
http://abcnews.go.com/Blotter/fort-hood-shooter-contact-al-qaeda-terrorists-officials/story?id=9030873
dewstarpath
November 9th, 2009
11:14 am
- Axelfraud – “distorted world view” as in taking the topic
of tax reform in Georgia and making it about a shooting
attack at a US Army base, by your own admission.
dewstarpath
November 9th, 2009
11:43 am
- About the topic at hand – the state of Georgia has
had a problem with innovation for years. This time
I agree with TechLover. If industries in the deep South
are allowed to police themselves as far as tax incentives
are concerned, it will generate a climate of endless tax-
evasion and embezzlement like never before. It will make
the usury problem look like petty larceny, with interest
charges over 100% and even 150% commonplace being
charged in poorer communities, which sadly make up the
bulk of the state’s economy.
It’s similar in scope to the bank failures, which were also
tied in to too much of an emphasis on housing and general
construction. Thomas Oliver had an excellent article on it
in Sunday’s paper.
MrLiberty
November 9th, 2009
12:58 pm
I guess nobody has every heard of the concept of private provision of services. I am certainly not saying that security is not needed, nor roads, nor arbitration of disputes or restitution for violations of property. All I am saying is that we would all be better off if GOVERNMENT didn’t have anything to do with these services, or any services for that matter.
I know plenty of well-educated Conservatives and THEY understand this concept. By the way Mr. Phantom, I guess you have not bothered to read all of the hundreds if not thousands of stories about the abuse of police power by uniformed officers against innocent citizens. Just because government provides the service, doesn’t mean it turns out the way you want. At least when the private sector does, and there is open and free competition, you can choose another provider, or maybe even start your own service.
If all you can do is argue for the status quo, or a watered down version of it with sufficient taxation so that your favorite pet government agencies can stay in business, then you have strayed far from the conservative ideals that once enlivened the movement.
MrLiberty
November 9th, 2009
1:03 pm
And Mr. Phantom, just exactly what service currently provided by government would actually stop you and your friends from doing the same right now to my house? Government police fill out paperwork. They do not stop crimes (unless by chance they happen to be there), and the Supreme Court has made it perfectly clear that they do not have any duty to protect an individual citizen. The best home defense would be my guns or a private alarm system linked to a monitored service that might be able to intervene on my behalf. The more money I spend, the more services I can expect to have. Certainly no so with government, where I am taxed the same as everyone else, and cannot purchase any better service than that which the politicians choose to deliver.
Again, why do we need government?
MrLiberty
November 9th, 2009
1:06 pm
Likely while you and your friends were breaking into my house, the local cops would be engaged in a drug or gambling, or protitution sting that involved violating the rights of innocent citizens who were engaged in consensual activities that the government disapproves of or objects to because they do not get their fair financial cut.
Everything government does is portioned out according to politics, while a truly free market in services (by the way, we do not have one), delivers services based on the goal of pleasing the consumer and maximizing profit. I’ll take the free market anyday. Conservatives use to as well.