Another Southern state not named Georgia looks to ditch the income tax

Another day, another Republican governor making a bold proposal on an issue Georgia lawmakers have been wrestling with. From the Times-Picayune in New Orleans:

Gov. Bobby Jindal is proposing to eliminate Louisiana’s income and corporate taxes and pay for those cuts with increased sales taxes, the governor’s office confirmed Thursday. The governor’s office has not yet provided the details of the plan.

“The bottom line is that for too long, Louisiana’s workers and small businesses have suffered from having a state tax structure that is too complex and that holds back economic prosperity,” Jindal said in a statement released by his office. “It’s time to change that so people can keep more of their own money and foster an environment where businesses want to invest and create good-paying jobs.”

Jindal said the plan would be revenue-neutral and that the goal would be to keep sales taxes “as low and flat as possible.”

Another Louisiana newspaper, the Monroe News-Star, reports the state’s sales tax could rise as high as 7 percent from its current level of 4 percent. Louisiana has three income-tax brackets, with married couples paying 2 percent on income up to $25,000, 4 percent between $25,000 and $100,000, and 6 percent on income above that.

Georgia — where couples pay 6 percent on any income above just $10,000 — has taken tentative steps down this road before, although never to the point of eliminating the income tax completely. Former Speaker Glenn Richardson in 2007 proposed repealing all ad valorem taxes and broadening the sales tax to cover goods and services (the latter are not taxed today) at the 4 percent rate — his so-called GREAT Plan. But that only included lowering the top income-tax rate from 6 percent to 4 percent, not zero. More recently, a commission appointed in 2010 to study comprehensive tax reform came back with a plan to lower the income-tax rate to no higher than 4 percent and as low as 3 percent, which probably would be low enough to boost Georgia’s competitiveness while keeping our tax base diversified (income, sales, property, etc.).

As you may recall, the latter plan was stalled in the Legislature in 2011 and last year resulted in a tax bill that was advertised as “comprehensive” but in fact merely tweaked some corporate tax breaks and granted a number of long-time wishes of certain industries (e.g., auto dealers). I’ve heard no one suggest that tax reform will come anywhere near this year’s legislative session agenda.

Meanwhile, Louisiana is pressing forward in the direction taken by Florida, Tennessee and Texas — the kind of states with which Georgia competes for jobs and workers. In North Carolina, another of our peer states, new Gov. Pat McCrory has also pledged to pursue tax changes that include lower income-tax rates for individuals and businesses.

All of which would seem to leave Georgia falling behind.

– By Kyle Wingfield

217 comments Add your comment

Aesop's Fables and other Lib Economic Theories

January 11th, 2013
10:16 am

Makes good common sense and would attract business and jobs so, of course, the libs will be against it.

MANGLER

January 11th, 2013
10:25 am

It’s one thing to have taxes that pay for services which make life in the State better. However, having lived in other Southern States not named Georgia, as well as the one that is named Georgia, I don’t really notice where that extra 6% goes to. It simply costs a little more to live and work here than it would in Florida, but the net benefit to me, the tax payer, isn’t apparent.
That being said, an income tax is a more stable revenue source than strictly sales taxes. Those ebb and flow with the economic winds much more so than people’s incomes. Florida’s tourism is unquestionably a larger industry than Georgia’s, and when the economy hiccups, Florida’s sales tax receipts go for a ride on Space Mountain.

Cutty

January 11th, 2013
10:25 am

Doesn’t matter if democrats are against it. So-called fiscal conservatives have close to a supermajority. You CONservatives own the state and whatever sad outcomes come from your ignorant policies. Any microCHIP implementations lately?

TiredOfIt

January 11th, 2013
10:28 am

Fables tells fables.

JamVet

January 11th, 2013
10:32 am

Well since a vast number of these corporations cannot even run their businesses without endless government assistance, we might as well just end the pretense and let the Welfare Kings go ahead and pay absolutely nothing in to we the people to operate in the greatest country on earth.

An Observer

January 11th, 2013
10:37 am

Maybe a 5% flat tax instead of a graduated tax that peaks quickly at 6% makes more sense.

Steve Dunbar

January 11th, 2013
10:40 am

Let’s see. We exempt the rich from paying state income taxes and we increase the state sales tax, which places an even higher tax burden on the poor and lower income resident.

I may be wrong, but I think Georgia has more poor and lower income citizens than rich citizens.
So this would benefit the minority at the expense of the majority.
Perfect Republican thinking.

cj

January 11th, 2013
10:40 am

Seems to work in Tennessee.

indigo

January 11th, 2013
10:42 am

Would it be a good idea to eleminate the IRS and just have a national sales tax?

What do you think?

Steve

January 11th, 2013
11:01 am

You take away the state income tax and we’ll be just hit somewhere else. In NH, they just raise the property taxes.

JDW

January 11th, 2013
11:06 am

Thing is it is not a question of taxes…it is a question of who pays. If you compare the states Kyle mentions to Georgia you find that each collects more revenue and spends more per capita than Georgia.

State Revenue Per Capita 2010

Louisiana…$6024
Florida…$3805
Tennessee…$4030
Texas …$3992

Georgia…$3774

http://taxfoundation.org/article/state-revenues-capita-fiscal-year-2010

One thing is for sure, as is the case with most things over the last 10 years or so Georgia is lagging.

Kyle Wingfield

January 11th, 2013
11:09 am

JDW @ 11:06: So does that mean you think we should follow the lead of FL, TN and TX and go to zero income tax?

Finn McCool (The System isn't Broken; It's Fixed)

January 11th, 2013
11:12 am

Another day, another Conservative moanin’ about having to pay the taxes that make the infrastructure work.

Yawn. Just pay your taxes Cons.

Finn McCool (The System isn't Broken; It's Fixed)

January 11th, 2013
11:14 am

Do we need to compare the tourism draw of NO/Louisiana to the tourism draw of ATL/Georgia?

Is it even close?

Kyle Wingfield

January 11th, 2013
11:14 am

Another day, another comment by Finn that demonstrates he didn’t read the OP. Yawn.

Finn McCool (The System isn't Broken; It's Fixed)

January 11th, 2013
11:15 am

Paying our bills through income tax is considered “falling behind” only by conservatives with no concept of the long view.

Rafe Hollister preparing for an Obamanist America

January 11th, 2013
11:18 am

Well, since the participation rate in work continues to decline and more people are working in non traditional jobs, where they get paid in cash, less and less folks are paying income taxes. There is so much underground economic activity that is going untaxed, we need to change along with the times.

I think we should go to a higher sales tax rate and drop the income tax in an effort to get to some of this underground activity. Maybe to make it more palatable to the Dems, drop sales taxes on drugs and all grocery purchases. Have to have something like a 10% rate to do this and make it revenue neutral.

Finn McCool (The System isn't Broken; It's Fixed)

January 11th, 2013
11:21 am

To boil these plans down, the goal is to shift the tax burden off of the high-end earners and on to the middle and lower classes. Wake up, people.

A guy making $100,000 a year pays the exact same price for a Big mac as the guy making $20,000 a year. And both of them can – logically – not consume more than 1 per meal. So, they, in effect, are paying equal total taxes.

The wealthy can’t spend enough in consumption to make up for the difference in the tax revenue that would be lost through ditching income taxes.

DW

January 11th, 2013
11:22 am

Get off the Dem / Rep kick. Have lived in TN, TX, & GA – Agree with other poster that said they couldn’t see where the income tax money goes. Services appear to the be the same or worse. The question Georgians should ask themselves is if FL, TX, TN & others can do without income tax and survive – then where is the income tax money going? True – sales tax is a consumption tax, but at least I have some control over that. Taxes should be looked at as a whole – income, sales, & property to make sure we are not paying more and getting less than other frugal, budget minded states.

Rafe Hollister preparing for an Obamanist America

January 11th, 2013
11:22 am

Any one who has driven I-35 from Dallas to San Antonio knows that the recession has not touched Texas. Whatever they are doing, we need to get on board.

Finn McCool (The System isn't Broken; It's Fixed)

January 11th, 2013
11:23 am

Remember, Florida’s income tax was ended because the sales tax could rely on all those tourism dollars flowing into the state.

Not enough people want to come see our , what, our crappy aquarium (even Chattanooga’s aquarium runs circles around the GA aquarium.)

JDW

January 11th, 2013
11:25 am

@Kyle…I think we should take their lead and attempt to fund our programs at a sensible level. I think the right way (state and federal level) is a combination of sales/VAT with an exemption for lower income levels, an income tax that kicks in around the 60th percentile, property taxes and use fees. I would prefer to see very limited deduction or loopholes in any system.

From the numbers standpoint I found some more recent data and since 2010 the gap has widened significantly. The data below is estimated 2013 for state…local…total revenue.

FL…$3,466.00…$3,325.00 …$6,791.00
TN…$3,436.00 …$3,906.00…$7,342.00
TX…$3,780.00 …$3,562.00 …$7,342.00
LA…$4,425.00…$3,185.00 …$7,610.00

GA…$3,287.00…$2,932.00…$6,219.00

We do indeed continue to fall behind but it is not because our taxes are too high relative to our peers…it is because we are not investing in our future.

Road Scholar

January 11th, 2013
11:25 am

Why doesn’t Georgia just tax “stupid”? We’d be rich!

Rafe Hollister preparing for an Obamanist America

January 11th, 2013
11:26 am

To boil these plans down, the goal is to shift the tax burden off of the high-end earners and on to the middle and lower classes. Wake up, people.

Yep, Dem plan, keep them poor and take care of them. Why not improve economic conditions that will allow them to find work and improve their lot in life.

JDW

January 11th, 2013
11:26 am

oops left out corporate taxes…btw those other states are comparable there too with the exception of TX which taxes recepits rather than income so it is not an apples to apples

Road Scholar

January 11th, 2013
11:26 am

Rafe: It’s called oil if you don’t know we are addicted to it!

Kyle Wingfield

January 11th, 2013
11:28 am

Finn @ 11:14: No, it isn’t even close. As of 2009, the most recent data available from the Census Bureau, Georgia brought in $17.6B in travel expenditures to rank ninth; Louisiana brought in $8.7B to rank 24th.

Kyle Wingfield

January 11th, 2013
11:28 am

Want to try again, Finn?

Tax Reform Needed in GA

January 11th, 2013
11:31 am

“Seems to work in Tennessee.: – CJ

Doesn’t Tennessee have a 10% sales tax ?

Finn McCool (The System isn't Broken; It's Fixed)

January 11th, 2013
11:31 am

Want to try again, Finn?

I’ve burned my 15 minutes of fame here, pal. Now, back to saving the world from Bane and The Joker.

Don't Tread

January 11th, 2013
11:31 am

“The wealthy can’t spend enough in consumption to make up for the difference in the tax revenue…”

Sure they can, but they don’t. You don’t become “wealthy” by spending all your money. Of course, people like you don’t want others to become “wealthy” at all and want the government to take their money away in the name of “equality” (of outcome), “social justice”, and all that.

It’s amazing that Democrats can solve all problems by taking away somebody else’s money or individual rights. :roll:

Sean Smith

January 11th, 2013
11:36 am

The recession hasn’t touched Texas for a number of reasons. First they pump money out of the ground that dramatically helps their economy. Second they have strong banking regulations (Surprising for a red state) that prevented the mortgage mess that happened in other places. Third the federal government spends more in texas than it gets in Taxes.

But Texas isnt a paradise, lots of homeless people and poorly insured.

@@

January 11th, 2013
11:37 am

Well….Washington state has no income tax, while neighboring Oregon has no sales tax. If you work in Washington state and live close to the border with Oregon, you’re in tax heaven. From light blue Washington to royal blue Oregon.

But the weather sux.

I cannot, for the life of me, understand why libs aren’t on board with a flat tax. It does away with special interests. Eliminate all income tax and go flat, I say.

Maybe to make it more palatable to the Dems, drop sales taxes on drugs and all grocery purchases.

Agreed.

MarkV

January 11th, 2013
11:38 am

Unlike on the federal level, I believe that a replacement of the state income tax with sales tax is worth serious consideration.

@@

January 11th, 2013
11:45 am

With income AND sales tax, the government gets us coming and going.

WE earn it, THEY tax it. WE spend it, THEY tax it.

Cherokee

January 11th, 2013
11:48 am

Rafe, what Texas is doing is drilling for the oil and gas that’s under their ground.

It’s a little too late in the game for Georgia to bury that stuff here so that we can employ people to go get it.

Rafe Hollister preparing for an Obamanist America

January 11th, 2013
11:49 am

Rafe: It’s called oil if you don’t know we are addicted to it!

Road, some of that, but it is mostly infusion of people, businesses, and money, due to the business friendly environment, low taxes, less regulation and a ” do whatever you want lifestyle”. Growth in itself is contagious, like baseball when everyone is hitting, it is more likely that you will.

Stephenson Billings

January 11th, 2013
11:51 am

Another day, another Lib wanting tax payers to just grab their ankles and take it from Uncle Same

Stephenson Billings

January 11th, 2013
11:51 am

Sam…. whoops.

HDB

January 11th, 2013
11:53 am

By eliminating the income tax and replacing it with sales taxes, it winds up creating a more REGRESSIVE tax structure because those with less disposable income will wind up paying more for necessities………

Alabama has a 10% sales tax….along with a state income tax…….

A PROGRESSIVE FLAT income tax is what’s really needed…………….

curious

January 11th, 2013
11:54 am

Most low income people have a relatively finite amount of money to spend.

Regardless of the Sales Tax rate, they aren’t going to spend more than that finite amount.

Rafe Hollister preparing for an Obamanist America

January 11th, 2013
11:56 am

I’m in Texas frequently, and seems to me most of the derricks are still idle, as they have been for years. Louisiana is a big oil state, if oil was the answer they would be “in the clover”.

Lil' Barry Bailout - OBAMAPHONE!!!

January 11th, 2013
12:04 pm

Unless I’m mistaken, dumping the state income tax means on fewer deductions on my federal 1040.

No thanks!

Tiberius - pulling the tail of the left AND right when needed

January 11th, 2013
12:05 pm

Not surprising that Finn focuses on food when trying to discuss sales tax comparisons, which is the way most libs attack the FairTax and their perceived inequities of it at the Federal level. However, what Finn doesn’t mention is that rich people buy more things – they buy more food because they entertain more. They buy new BMW’s and Lexus’ instead of used Chevys, and do so more often. They buy bigger, more expensive houses. and they improve them more often, which means they buy more building materials.

Eliminate the income tax, adjust property taxes at the local level for local services and move into the 21st century regarding tax policy.

Rafe Hollister preparing for an Obamanist America

January 11th, 2013
12:06 pm

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfptx2&f=a

Texas Field Production of Crude Oil (Thousand Barrels per Day)
Decade Year-0 Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-
1980’s 2,554 2,488 2,419 2,413 2,381 2,245 2,085 2,010 1,885
1990’s 1,859 1,870 1,778 1,696 1,618 1,533 1,485 1,470 1,383 1,231
2000’s 1,211 1,162 1,112 1,098 1,073 1,076 1,075 1,072 1,109 1,093
2010’s 1,171 1,463

Oil production has been on a downward trend since 1980, with an insignificant bump in the last couple of years.

So, there goes the lib theory on Texas’ booming economy.

Rafe Hollister preparing for an Obamanist America

January 11th, 2013
12:10 pm

Finn’s Big Mac analogy is also flawed, but then again it is Finn’s analogy, so no surprise. Rich people are more likely to eat at Longhorn than McDonalds and pay more income tax on lunch, while also helping some poor person by leaving a nice tip,

Glenn

January 11th, 2013
12:12 pm

Florida doesn’t have income tax and there economy has never been good . Seems to me that if you eliminate the income tax you will just raise taxes in other areas or we will finally run a deficit in Georgia .

Latifah

January 11th, 2013
12:15 pm

Once your odometer turns 65 in GA the first $65,000 of retirement income is tax exempt, so you have that to look forward to.

Aesop's Fables and other Lib Economic Theories

January 11th, 2013
12:17 pm

Any one who has driven I-35 from Dallas to San Antonio knows that the recession has not touched Texas. Whatever they are doing, we need to get on board.

Rafe – It’s called Fracking. And horizontal drilling. You no longer need a derrick in every back yard, you can do a wide area extraction from a relatively small single location. But alas, unless you’ve got an existing permit, dream on about those budget surpluses, abundant good paying jobs and economic boom times that North Dakota and Texas are currently enjoying. obozo and his army of environmental terrorists have locked down everything else and clutch their crying towels like colicky two year olds. They hate America and much prefer that you live in the Stone Ages as long as it doesn’t encroach on their little hidey places like DC.

(Louisiana forfeited it’s right to extract oil when they invited all of socialism over to examine their leaking oil rig out in the gulf. They’ll NEVER recover from the drilling they’re getting right now.)

Dusty

January 11th, 2013
12:25 pm

zzzzzzz All I want is to have my taxes cut on everything and live happily ever after. Also, let us drill for oil in Georgia. There should be plenty. with all the greasy raucous northerners flooding the state not to mention their great inclination to say something BAD about Georgia.

( Actually I love all Americans even the greasy ones!.) But fiscal fandangling is not fun. Boring even as we die from poor federal management in this country. THE DEBT!!

Now THAT is scary enough to be interesting.