Where things stand now on Georgia tax reform
Here’s what I’m hearing as far as the possibilities for a tax-reform bill this session:
- Option 1 is the bill I discussed yesterday, which came out of a joint House-Senate committee. House Democrats say this would result in a tax increase for taxpayers earning between $20,000 and $180,000 a year. House Republicans counter that the only increase would be for about one-third of those earning between $80,000 and $140,000 a year.
- Option 2 is designed to address the Democrats’ criticism by changing the phase-out of itemized deductions that would have led to the tax increases described above. House Republicans say the result would be that 90 percent of those in the $80,000-$140,000 bracket would see no change or a tax cut, and that the overall plan would amount to a tax cut of $150 million to $200 million. As of last night, however, I was hearing different things as far as whether there was a fiscal note to accompany that plan and back up the House Republicans’ claims.
- Then there’s Option 3, by far the worst of the lot. This plan, which I understand came from some Republicans in the House who were reluctant to go for either of the first two options, would strip down what I’ve called Tax Reform Lite to what I’ll call Tax Reform Zero. It would entail only the exemption on energy inputs for manufacturers and farmers, and a reduction in the personal income-tax rate of — wait for it — one-quarter of one percentage point. That’s right: What’s now a top rate of 6 percent would become a flat rate of 5.75 percent.
So, what we have here is a Republican-dominated Legislature that was handed a plan to reform our tax code to make it flatter, broader, simpler and more competitive — including a component to cut the personal income tax as low as 3 percent, or half the current top rate.
And some of them — legislators who call themselves Republicans, mind you — would prefer to keep your taxes almost twice as high, at 5.75 percent.
I can’t imagine why they would even bother with such a plan. Even the House Democrats wanted to cut taxes further than that.
I stick with my position from yesterday: That Option 1 was better than nothing, but that the rush to tweak the plan here and there is not appropriate for an issue that could substantially affect all Georgia taxpayers. Lawmakers need to be certain — as certain as one can be about tax reform and its effects — that they are making the system better rather than worse.
At this point, it would be most prudent to shelve the plan until next year’s session. Or, possibly, the special session that will be called this summer to deal with redistricting — but only if the plan is worked on thoroughly and transparently between now and then, and not dropped in legislators’ laps as a surprise.
But legislators definitely had better not try to get by with Option 3 and sell it as the kind of “tax reform” they promised.
– By Kyle Wingfield
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