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
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64 comments Add your comment
Rafe Hollister
March 20th, 2012
1:19 pm
Kyle, you asked in Jan what we hoped the legislature did this year. I said I hoped they sine die the first day and go home. Every year is the same, we hope for major reforms and we get a bunch of blowhards mouthing off about things that need changing. Yet, at the end of the last day all they ever accomplish is to spend more of the taxpayers dollars, stir the same old issues in the same old pot, reward their friends, and proclaim that they accomplished a great deal. What a waste of taxpayer resources.
No Artificial Flavors
March 20th, 2012
1:24 pm
Sounds to me like the state is trying to make itself look good with the birthday tax switcheroo at the expense of local governments since the bill doesn’t sound very clear about how the state will (or can ever be trusted to) make up the full difference. This will just force already overstretched local governments to raise taxes or cut major services. The state just transferred a lot of problems to the whipping boy counties and boards od education, many of which are already at or near their millage caps.
JF McNamara
March 20th, 2012
1:25 pm
Linda,
Welfare and Food Stamps are less that .1% of the budget. Medicare, Medicaid and Social Security are problems, but why weren’t they solved earlier? I first heard of shortfalls in 1991. Both Republicans and Democrats have had full power and the opportunity to solve the issue but haven’t. Why?
The answer is that reigning in and restructuring the programs wholesale is not needed. Tweaking the age of social security is all that is needed. It’s just a manufactured “crisis”.
Rafe Hollister
March 20th, 2012
1:29 pm
JFM
You are right, if the Dems ever allow SocSec and Medicare to be fixed they wouldn’t have anything to use when they run against the Reps. Their ads usually are the same GOP wants to take away your Soc Sec, Medicare, poison the environment, and burn black churches. This year they will add take away your birth control and free health insurance.
If they have anything else to run on, we never hear it.
Karl Marx
March 20th, 2012
1:43 pm
Dear Road Scholar
Is reading a lost art for Liberals? It must be and yes Democrats as just as much or MORE to blame for our current sad state of affairs. Get over it.
Shep
March 20th, 2012
1:51 pm
There is a reason Walking Dead is filmed in Georgia. They can use the state legislature as the walking zoombies in the show. I think that describes them pretty well.
Linda
March 20th, 2012
1:58 pm
JF McNamara@1:14, There is NO 20% marginal tax bracket. A marred couple filing jointly who make $50,000 in 2012 will be in the 25% bracket.
High income earners are not necessarily rich. Rich people are not necessarily high income earners. A rich person is not charged taxes on his wealth, until he dies.
A person earning $1 M in 2012 will be in the highest marginal tax bracket of 35%.
The 15% you referred to is NOT even a marginal income tax bracket. It is one of the many capital gains rates, which vary on what is sold & how long it was owned, & are up to 35%.
Income taxes are paid on income. Capital gains taxes are paid on the profit of the sale of an investment. Money invested was earned & income taxes were paid.
Only investors pay capital gains taxes. Most of people earning over $1 M are not investors. You deliberately misrepresent how CEOs, attorneys, doctors, professional athletes, actors, etc. are paid & how they pay their income taxes.
Here you are again trying to mislead people reading this blog. You should be ashamed of yourself.
Linda
March 20th, 2012
2:09 pm
JF McNamara@1:25, Shortfall? You mean theft. A Ponzi scheme going on right before our eyes.
The Democrats deny there’s even a problem. Bush tried to solve it & was creamed. Every time the Republicans go out on a limb, the Democrats cut the limb off. Obama has ignored his own Debt Commission & the committees of this & that. He ignored the downgrade.
Ryan & the Republicans have come out with a new budget today, 2 years in a row. I can’t wait for the Democrats’ commercials.
Manufactured crisis? Want the phone # of S&P, Moody’s, etc.?
OBIWAN
March 20th, 2012
2:10 pm
JF McNamara;
It is obvious that you have NOT read the far tax at all and you are regurgitating left wing nut talking points. Why was it lambasted, are you really that ignorant, I guess so. I will say this as simply as I can; they don’t like it because it removes their power to punish businesses and people that they don’t like with the tax code. Regressive that is a big word for you, how about we use the correct word, and it is FAIR to everybody, people and businesses. Isn’t that what you want fairness? By the way the proof that you have NOT read this code is in what you made up, it would generate MORE revenue because it is assuming that the tax PAYING base would be the same as it is now, but it would be larger, and tourist would also be paying into the system, as would illegal aliens. But hey, JF McNamara, don’t let those pesky facts get in the way of your desire to punish people who make more than you. Please explain to me why a level playing field is not fair?
jd
March 20th, 2012
2:18 pm
The legislators are forcing local governments to cut taxes and then claiming the tax cut as one the state provided! Now, how many commandments of the TEN are they breaking?
Linda
March 20th, 2012
2:19 pm
A liberal blogger cites the most liberal commentator in the southeastern US to “dispel” the fair tax, a liberal commentator who I believe it too intelligent to believe his own articles.
Kyle Wingfield
March 20th, 2012
2:56 pm
ICYMI, folks, I have more on this issue upstairs.
Lil' Barry Bailout (Revised Downward)
March 20th, 2012
3:41 pm
JF Mc: The rich pay a lower percentage, but they pay more in real dollars.
——–
Wrong again. The rich pay a higher percentage AND more real dollars.
http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=2432
Thanks for playing.
Hillbilly D
March 20th, 2012
4:12 pm
They ought to give Zell a call and ask him what happened when he tried to collect sales tax on private vehicle sales. Of course to his credit, he did manage to paint himself a hero for recinding the tax, even though it was his idea in the first place.