Unsure of the new tax reform package? Join the club

After attending yesterday’s legislative hearing about the new tax-reform bill, I had to go home and tend to some unexpected family business. (Not to worry, everyone’s OK.) But even if I’d been free all yesterday afternoon to write about the bill, I’m not sure I’d have known exactly what to say. I still don’t.

I will have more to say about the individual components of the package at a later date. For now, I’ll stick to my broad impression of it.

From the yeoman’s work of the members of a special council created two years ago to modernize a state tax code that had been appended and patched up with little more than duct tape over the years, we stand to get what amounts to this:

  • No change in the personal income tax rate, brackets or deductions — just a partial reduction of the “marriage penalty” and a hard cap on the investment income retirees can exclude.
  • No change in the corporate income tax (despite a campaign promise by Gov. Nathan Deal).
  • No flattening or lowering of the tax code, and not much broadening or simplification, given that most of the changes simply tinker with or add to the list of exemptions to the sales tax.
  • A negligible shift from income taxes toward consumption taxes, chiefly representing the new application of a title tax to person-to-person sales of used cars — and then only if you consider the new title tax, which replaces sales and ad valorem taxes, a consumption tax. There is also a new method of enforcing the sales tax on more online purchases, which is billed as a relatively small deal ($47.7 million over three years) but has been described before as a much more substantial one ($410 million per year according to the special tax council’s report, although that may have covered a broader scope of e-commerce).
  • A tax cut chiefly as regards what we pay local governments: about $210 million over three years in lower local taxes on individuals and businesses, versus about $90 million less in state levies during that time. But, here again, I’m not sure if those really are the right figures, given that the state has pledged to help the locals make up the difference, at least on some taxes and at least for a while — and we all know where the funds for that “help” come from. (We, the taxpayers.)

In short, this package is “comprehensive” only in the sense that it is wide-ranging. It is not complete and does not touch all or even the most important elements of the tax code. It will be beneficial to some people and businesses but not others, and it does not represent a true leveling of the taxation field.

Does this mean it’s a bad package? Not necessarily, and I will stipulate here that I want to know more about some aspects of the package before giving it a thumbs-up or -down. There are some elements that clearly are pro-growth, such as the exemption of manufacturers from the sales tax on energy — something all our neighboring states already have, and the lack of which hurts our competitiveness.

But if we compare it to the direction we’ve been led to believe our state political leaders want to take us — outlined in the bullet points above, but generally: flatter, lower, broader and simpler, and tilted more toward consumption than income — I don’t see how it measures up to that.

– By Kyle Wingfield

64 comments Add your comment

Karl Marx

March 20th, 2012
6:16 am

Any parent of small children knows when a child gets very quiet you need to see what the child is getting into. Usually they are getting into something they shouldn’t. As it turns out our state legislators need the exact same rules parents apply to 2 year olds. It seems the Governor and state legislators have been very quietly preparing a last minute push to pass most of last year’s failed tax reform plan.

This latest disaster contains a huge gift to the new car dealer lobby. New car dealers for years have complained that individuals selling cars don’t pay sales tax. Under this proposal you will pay a Title “Fee” of 7% if you buy a used car from a private individual. Next we have another push to tax internet sales. Again another big lobbyist group for retail sales will get a huge gift from the legislature. The state hopes to tap into more sales tax revenue to pay for more useless “Go Fish” Museums. They will try to kill the movie business in Georgia by applying additional taxes on goods and services purchased by the movie industry.

There are winners in this horrible tax plan. Big business will get an energy tax cut paid for by middle class working families. State government will get a large windfall from the Title Tax. The big losers are local governments and middle class taxpayers.

Remember when parents catch their child getting into something they shouldn’t the child usually receives a spanking. We should treat legislators who support this disaster the same way by giving them a serious spanking at the ballot box.

DeborahinAthens

March 20th, 2012
6:40 am

Keep re-electing the Republicans and you will continue to have a state that is last in education, a national joke on policies that are vital (no water? Let’s steal it from Tennessee, Average commute time an hour, let’s spend a fe million to make an HOT lane),last on ethics, the list is endless. We are a national joke and what’s worse is we pretend to be an “international” destination. Our roads are crumbling, our schools are failing, none of the bozos have the balls to raise the taxes, so they are going to fee us to death. The lobbyists know they have them in their pocket, so of course you’re going to get things like the 7% fee on cars sold by individuals. We the people matter not a whit to people like Nathan Deal, but people like Kyle voted for him because they couldn’t bring themselves to vote for a Democrat. We are sick and ailing. We are dead, we just haven’t fallen down yet.

independent thinker

March 20th, 2012
7:19 am

Hey they are probably not going to pass this bill unless they get greased enough by car dealers and victims of internet sales. What do you think free trips to Hawaii and and a year’s free dinners at Ruth Christs for each hayseed that votes for the bill? Anyway punishing women and doctors for abortions and passing the latest NRA license to kill laws is much higher priority.

JDW

March 20th, 2012
7:26 am

WOW our Republican leaders hard at work…lets talk about all the other wonderful things they have accomplished this section! What were those again?

Will

March 20th, 2012
7:34 am

This is a tax package that all “tax and spend” big government backers should get behind and support.

One thing about politicians, regardless of if they get elected by promising to reduce spending and taxes, they all get “tax and spend” fever once they land under the Gold Dome.

I thought the Holy Bible of Tax Philosophy in Georgia began and ended with the “Fair Tax” Linder-Bortz Plan. What’s that you say? That’s only a campaign promise by politicians in order to pick up additional votes, not a serious governing plan? Oh yeah, I forgot, how silly of me to believe that politicians actually believed in something other than “tax and spend”.

That tax holiday notion is hoot! Let’s see, a young family spends $200.00 in “Back to School” needs and wants to avoids paying $14.00 in sales tax so they drive to another state in order to avoid paying this $14.00 tax? Only a politician could pitch this rational!!

Interesting

March 20th, 2012
7:39 am

As a Republican, it’s sad to see the state of our legislature. They don’t care about ethics, they don’t want to help the people by passing a consumption based tax, and they want to give their developer friends a pass on losing in a bad economy.

ragnar danneskjold

March 20th, 2012
7:42 am

An illusion of activity. Turns out legislators are just like bureaucrats.

Marko

March 20th, 2012
7:42 am

“I thought the Holy Bible of Tax Philosophy in Georgia began and ended with the “Fair Tax” Linder-Bortz Plan.”

As that’s a plan for Federal tax law, I don’t really see how that applies to Georgia politics. But it is obvious Georgia politicians, like their Federal counterparts, are not really serious about cutting government spending (no matter which party is in power).

Bobby

March 20th, 2012
7:49 am

So, the legislature waits until the final 8 days to try and get a comprehensive new tax bill through. If it was to pass wonder what “surprises” we can expect from this Republican legislature. More fee increases perhaps for Georgia Power customers to pad GPC investors accounts and those of their law firm, Troutman, Sanders?

JohnnyReb

March 20th, 2012
7:54 am

“Does this mean it’s a bad package?”

Sure sounds like it. The Republicans are acting like Democrats. Are they RINO’s?

A reduction in corporate taxes in theory would boost revenues. I can buy that one. The rest of it is more ways to squeeze blood from a turnip.

I see they have at least a mild case of the Obama syndrome revelaing itself in wanting to cap retirement income exclusion. Leave old people alone, you idiots.

man behind the curtain

March 20th, 2012
8:08 am

“they don’t want to help the people by passing a consumption based tax,…”

Splain to me again how a regressive consumption tax helps the people.

Skip

March 20th, 2012
8:16 am

Who wrote this and what did they do with Kyle?

the red herring

March 20th, 2012
8:19 am

If that’s what we wind up with as a tax package it is a poor one indeed. One of the few tax breaks the middle class taxpayer has now is being able to sell his used car and not take the beating on the depreciation and the sales tax too. Certainly a win for new car dealers not for the ga. taxpayer/citizen. We need to move to a fair or flat tax and eliminate the politicians jerking the taxpayer this way and that. We also need to seek to have the sunshine law strengthened and expanded to include all of Ga. government. Way too much behind closed doors deals. An “F”
if what we get on ethics and now on a fair/flat tax effort as well.

jconservative

March 20th, 2012
8:51 am

I still say lets cut state spending and the size of state government before touching the state tax code.

I vore NO on any tax “reform” until state government has been reduced in size.

Don't Tread

March 20th, 2012
8:56 am

Yesterday, I got a call from somebody who wanted to transfer me directly to my state representative’s phone number to urge him to support this bill. At the time, I didn’t know anything about it, and after reading this, I’m glad I didn’t bite.

I wonder who’s funding this little operation and what’s in it for them?

Karl Marx

March 20th, 2012
9:02 am

Wow DeborahinAthens, vote for a Democrat, really? You are ignoring the fact that most of the “Republicans were liberal Democrat party switchers. That’s what’s wrong there are no real conservatives in the state house. Were just seeing more of the same tax and spend big government that the Democrats created when they were in power. There is NO difference between Democrats or Republicans at the state level. Thinking that voting for a Democrat is going to fix anything is just a huge bad joke. Replacing big tax and spend politicians with bigger tax and spend politicians is not what is needed.

JF McNamara

March 20th, 2012
9:03 am

That’s a lot of writing you did there Kyle. Is this a summary?

1. A new tax on me – Tax on internet purchases.
2. Take the money from the internet tax and give it to business.
3. Placate me with a local tax cut that is far smaller than the internet tax to hide the fact that you are shifting the money to business.

Road Scholar

March 20th, 2012
9:13 am

All bills allowing changes in our taxes and fees should be introduced in the legislature in the first 10 days and cannot be voted on until the last 10 days of the session. That way the electorate has time to define the real impacts to the people. But Nooooooo! They have to unveil this and rush it at the end.

What’s with the new taxes/fees on the movie industry and the cut back on retiree income free from taxes? These have been main focuses in the past to encourage film making and to increase our competitiveness to attract retirees to this state.

Johnny Reb: Don’t bring President Obama into this. This is actions by YOUR beloved Repubs.

Road Scholar

March 20th, 2012
9:18 am

Karl Marx: Stop blaming the democrats for the asinine actions of YOUR Repub party. They are yours now…you elected them..even if they may be Rino’s. These Bozo’s have been in power for 10 years now; the warranty on changing parties has expired.

ByteMe

March 20th, 2012
9:35 am

Kyle, from your description, it sounds like Leadership is playing a game of Three-card Monte on us. Except they really don’t want us to follow the “queen”. Or even know if there’s a queen in the game.

Chuck

March 20th, 2012
9:41 am

I’d like to see a point by point comparison of the State of Georgia’s taxes, spending and mortgage regulation with those of the State of Texas. Texas is growing, we’re not. Way more of our banks have failed.

Steve

March 20th, 2012
9:54 am

Georgia is so freaking annoying. If the weather wasn’t so stellar here, I’d move in a heartbeat.

Cliff

March 20th, 2012
10:00 am

If only we could find a way to tax the pollen-creators, we could save the budget and our lungs at the same time. Seriously though, I do not know which is worse. Last year, the tax plan was introduced at the beginning of the legislative session and picked to shreds by lobbyists. This year, the plan was developed in secret and is being railroaded with as little time for comment, debate, and thought as possible.

Aquagirl

March 20th, 2012
10:00 am

You are ignoring the fact that most of the “Republicans were liberal Democrat party switchers

The avoidance is strong with this one.

It’s sad to see someone who has utterly bought the talk radio line. Karl’s entire worldview depends on the idea that Democrats are the source of all evil and the true threat to America. When that worldview is threatened he will do anything to sustain it, including complete fabrication of an alternative reality.

I used to think people like this were just internet trolls, but some of them really believe what they type. Scary.

jd

March 20th, 2012
10:13 am

Kyle, if the data from the Fiscal Note and the hearings cannot answer your basic questions — then no one can vote with any confidence as to the true impact of the legislation. Flies in the face of zero-based budgeting principles — understand the costs, the benefits, agree on the measures indicating success — then vote.

the original and still the best John Galt

March 20th, 2012
10:14 am

It’s silly for the Department of Revenue to be expected to collect from businesses that have no physical presence in this state when the department has proven itself incapable of collecting from instate non-taxpayers.

I worked in a State office when the Republicrats took over from the Demopublicans. The new good ole boys who were appointed to be in charge were indistinguishable from the old, except that they were more stupid.

OBIWAN

March 20th, 2012
10:16 am

DeborahinAthens;
Please tell me how you expect the republicans to fix 150 years of democratic rule in less than a decade? And as you say the “balls” to raise taxes are you really that stupid? How about the “balls “to live within our means? We don’t have a tax problem we have a spending problem the loser left does not want to even acknowledge.

sircharles19

March 20th, 2012
10:19 am

Like all tax reforms they are not geared toward the tax payers it is the other way around. As citizens of these United States, we are often target to make up what cities, counties and states needs for their benefits. Yes, we are targets for others to live and operate off of the taxes we pay………..and it continue with many of the less dollars the officials have to operate with. They look to all of us to fill in the gaps. I would say, its is time they lower their annual pay checks and take a lower salaries because to many key people are six figures. We all have to do our part….would you say?

MrLiberty

March 20th, 2012
10:39 am

Here are three things you can count on with whatever comes out.

1. Government spending will no go down anywhere near enough if at all.

2. The average Georgian will end up with less money and less freedom when this is all through.

3. Specific special interests (who have already written their campaign fund checks) will benefit greatly from the outcome.

Seriously, can you not see how much better off we would be with little or no government destroying our lives and our freedoms? I am not saying that services don’t need to be provided, but do we really need an overarching taxing authority with no accountability that serves its own interests with no competition, no motivation to provide good service, and the authority to take away your freedoms, your money, and your life (as it sees fit)?

OBIWAN

March 20th, 2012
10:46 am

Georgia should lead the way and abolish the state tax and go to a consumption tax, that way the liberals crying about “fair” taxes would get just that… The rich who consume more would pay more taxes, so why don’t we do it here?

JF McNamara

March 20th, 2012
10:51 am

@Obiwan,

1. Neither Texas nor Florida have State tax.
2. Jay Bookman did a series on the “Fair” tax that dispels what you are saying.

Here is a link to Part 1. Parts 2-4 are on the right sidebar under his blog roll.

http://blogs.ajc.com/jay-bookman-blog/fervent-faith-in-fair-tax-defies-reason/

MrLiberty

March 20th, 2012
11:14 am

It all comes down to spending, not taxation. The government is WAY TOO BIG and spends WAY TOO MUCH. They do a crappy job at what we need them to do (protect our rights, enforce contracts, protect us from fraud) and does way too much of everything else we don’t need them doing.

They get us arguing about taxation because they use the code to pit one group against another. Works the same way at the federal level. Meanwhile far too many agree incorrectly that government actually needs all that money. They don’t. There is virtually nothing the government does that cannot be done more inexpensively and certainly better by private citizens working together voluntarily or as businesses competing in a free market. How much longer are we going to put up with the constant failure before we say enough is enough and demand MASSIVE cuts?

Old timer

March 20th, 2012
11:34 am

From what I remember…democrats were no different in the hundred plus years they ran the state.

Old timer

March 20th, 2012
11:35 am

TN manages without a state tax also.

JF McNamara

March 20th, 2012
11:35 am

@McLiberty,

That’s simply not true. The reason why we have all these programs is because the free market and volunteers were inadequate. Americans in the past didn’t like taxation any more than you or I and were just as smart as you and I. They initiated these programs to solve pressing issues. Those issues have been solved for the duration of your lifetime, so you don’t understand how bad it was before the programs.

For instance, at one point, there was no welfare or food stamps. People either had to live in “poor houses” or resort to crime. The implementation of these programs provides food to those who can’t afford it while allowing people to get on their feet.

At one point, people didn’t have social security. You worked until you died, because people failed to save. It became a burden on society as people began to live longer and became unable to work at an advanced age. By forcing people to save, we aleviated that problem, and we spurred the economy because retirees had time and saved money to spend.

Americans need to understand WHY the programs exist, and what problem they solved at implementation. We don’t spend too much. There are reasons for every dollar we spend.

OBIWAN

March 20th, 2012
12:11 pm

JF McNamara

Did you read his book? It is full of what if’s and could be’s but nothing that would dispel the fair tax. Seems funny that you would site a hard core lefty that does not like a conservative idea, a little biased maybe? Instead of reading a hardcore leftist revue why not go read the Fair Tax it’s self at FairTax.org, but if you are like most lefties you don’t read, you regurgitate talking points from loser lefties, like you just did. You see the fair tax would remove a lot of power from the federal government, our current code is designed so that our government can punish businesses it does not like and give breaks to the ones it likes. Why on earth would you want to have a level playing field for all businesses, right JF McNamara?

Jefferson

March 20th, 2012
12:26 pm

I’ll bet you a nickel, and loan you the nickel to bet with that this will turn out worse for most Georgians.

You can’t have your cake and eat it too, sorry that’s life.

clyde

March 20th, 2012
12:27 pm

DeborahinAthens—–Vote for Democrats and we’ll have an entire country just like Georgia.

The one thing I have found I understand about tax reform is that they never seem to help me.They are always for some group that I don’t belong to.

Jefferson

March 20th, 2012
12:29 pm

Somebody tell the old timer we didn’t owe the federal gov’t over 600 million when the D’s ran the show.

Lil' Barry Bailout (Revised Downward)

March 20th, 2012
12:29 pm

JF McNamara: implementation. We don’t spend too much. There are reasons for every dollar we spend.
——

Our poor would certainly suffer if they weren’t provided with free cell phones, for example.

catlady

March 20th, 2012
12:30 pm

Sounds like an “improvement” written by an ADHD with friends to “pay back.”

JF McNamara

March 20th, 2012
12:36 pm

@Obiwan,

I read books that actually say things that I can’t debunk myself in a matter of minutes. The fair tax is regressive and can’t make up for the lost revenue in income tax. They’ve come up with exemptions and workarounds, but the end result is the same. It ends up changing one convoluted system for another convoluted system only in the new system wealthy people get a huge tax break that is made up for by the middle class.

Secondly, if this is such a good idea, how come Herman Cain’s 999 plan was so ridiculed? Isn’t that an implementation of the Fair Tax? The Republicans lambasted the plan in the debates and the news sources all agreed it was regressive and would increase the debt.

Are the Republican nomininees liberal leftys?

JF McNamara

March 20th, 2012
12:43 pm

@Lil’ Barry Bailout,

The Lifeline program was established long ago to ensure rural residents access to telephone service. Since we’ve now gone to cell phones, those without home service can get a featureless emergency phone with 250 minutes per month (no data and no messaging).

While that is part of the program, the large majority of the money goes towards building cellular towers and and infrastructure in rural areas. For instance, the reason why you have cell service between here and Charlotte is because of the Lifeline program.

I don’t necessarily agree with the free cell phones, but I understand why they exists. Did you?

Lil' Barry Bailout (Revised Downward)

March 20th, 2012
12:44 pm

JF McNamara: in the new system wealthy people get a huge tax break that is made up for by the middle class.
———

Gee, according to Obozo and his receptacles, the rich pay a lower percent than the middle class, but under the Fair Tax, everyone pays the same percent. That would make the Fair Tax more progressive than the current system.

Either you or Obozo is lying.

Linda

March 20th, 2012
12:46 pm

Mr. Liberty @ 10:39 & 11:14 & OBIWAN @ 10:46 & 12:11, Well said. Keep it up.

JF McNamara, once again, there will be NO welfare, food stamps, social security, Medicare, Medicaid, or US govt. if these programs are not reigned in & restructured.

Lil' Barry Bailout (Revised Downward)

March 20th, 2012
12:47 pm

JF Mc: Oh, so when you said there are reasons for every dollar we spend, you didn’t intend to imply that the reasons were sound.

Land lines are cheaper than cell phones. The government is wasting money they don’t have.

Thanks, Democrats.

K4

March 20th, 2012
12:48 pm

The Republicans have done a great job lying to the people of GA for years… they keep telling us that they are the only ones who can grow this State and create jobs… I see none of that. Just the usual pandering to the far right extremists out in the sticks and making sure that our rights and privileges continue to erode.

Lil' Barry Bailout (Revised Downward)

March 20th, 2012
12:50 pm

And yes, I do understand why Democrats give “free” cell phones to the poor–to buy their votes.

Is that one of your good reasons for spending those dollars?

yuzeyurbrane

March 20th, 2012
1:02 pm

Kyle makes a lot of good points. My overall impression is that proposals increase taxes on average person and decrease them on businesses and that if you are large business it doesn’t hurt to have made large campaign contributions.

JF McNamara

March 20th, 2012
1:14 pm

@Lil’ Barry Bailout ,

You’re wrong, three times.

1. Cell phones are much cheaper than land lines. It’s why when you call another country, they almost always have mobile numbers.

2. The rich pay a lower percentage, but they pay more in real dollars. A. Middle Class – 20% of 50,000 is $10,000 in taxes.
B. Rich – 15% of $1M is $150,000.

In this example, if the rich person pays 20% in taxes they would have paid $50,000 dollars more.

3. The Lifeline Plan is not new. It was established in 1997. A Republican Congress approved it and W had eight years to abolish it. It’s not Democrats buying votes. It was bipartisan.