Calling all CPAs, tax attorneys: Time for cloud journalism
Only a few hours ago, the 2010 Council for Tax Reform and Fairness for Georgians released its long-awaited proposal for overhauling the state tax system.
It’s a 97-page monster with many details. See it here. Restoring the sales tax on groceries is the most serious element. But my AJC colleague Chris Joyner, just sent me this note:
I’m looking through the list of exemptions they want to sunset. It’s literally the water you drink and the air you breathe (they want to eliminate the sales tax exemption on water piped into your house and bottled oxygen). Also MARTA fares, lottery tickets, schools lunches, sales to hospices and nursing homes, prescription drugs, tickets to community theaters, DAR raffle tickets, and church bells.
If you have experience with the Georgia tax system, we need your help to put this document through some quick scrutiny. What would these changes mean? What are the unintended consequences?
Post your observations below – or mail them to cjoyner@ajc.com.
Many thanks. And stay warm this weekend.
- By Jim Galloway, Political Insider
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70 comments Add your comment
Jeff Sexton
January 7th, 2011
7:30 pm
One of the most striking to me was that they recommend charging sales tax on person to person sales of cars.
Knowing the culture of the lower income, this will absolutely be a tax increase on that segment of society, people who can’t afford new cars, and for whom even used cars from a lot are simply too expensive – and yes, such families exist, particularly in this economy.
Georgia has nearly 40 State Representatives, 14 Senators, and 1 Governor who have signed Americans For Tax Reform’s Taxpayer Protection Pledge. Among those State Representatives is Speaker David Ralston, and among those Senators is Majority Leader Chip Rogers.
I ask each of these members to “honor thy pledge” when these recommendations come up for the required up or down vote.
Jeff Sexton
January 7th, 2011
7:37 pm
Also note that the initial numbers I am hearing are staggering: a $1 BILLION tax increase.
But legislative reality is this: Education and Corrections are two of the biggest Departments left to cut. No politician wants to cut education or look soft on crime, yet Georgia faces a $1.5 BILLION shortfall in this year’s budget.
All of a sudden, this BILLION dollar tax increase means that these legislators will only have to find an additional $500 Million in cuts – FAR more palatable than 3x the number, which means that if they can find a way to not phrase it as what it is – a tax increase – all of a sudden this tax increase looks MUCH better to them.
Meanwhile, even our Speaker recognizes that “We’re spending a huge amount of money locking people up that have drug problems,” and that “At some point the people of Georgia have a right to ask if that’s an appropriate way to spend their tax dollars.”
Mr. Speaker, Please honor thy pledge. Please find a way to solve this budget crisis without another tax increase.
Paul
January 7th, 2011
7:38 pm
Eliminate the state income tax and raise the sales tax to 8% (I think it’s 10% in Texas).
Just another tax increase.
January 7th, 2011
8:05 pm
How about taxing legal fees.
Jimmy
January 7th, 2011
8:14 pm
I agree with taxing lottery tickets. I disagree with taxing food.I would rather raise revenue with more tax on cigarettes,beer and wine,and gasoline but not on basic food items.
billy
January 7th, 2011
8:28 pm
tell chris joyner to cry me a river. obviously from his short comment he is against a consumption type tax. but he spins it as “they’re taxing the water we drink”. oh me. this tax proposal attempts to even the tax paying playing field. sounds like he is a believer of spreading the wealth as well as our prez. if that’s the case, tell him he can come over and paint my house or pay my mortgage. whatever he can do to spread the wealth. ttfn…
waterstim
January 7th, 2011
8:33 pm
How about taxing accountants?
khc
January 7th, 2011
8:39 pm
this may be food for thought:
http://www.itepnet.org/whopays3.pdf
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Mike
January 7th, 2011
9:05 pm
The Auto Dealer Lobby, which is fairly strong at the Legislature, has been trying to get person to person used car sales taxed for a long time, they view it as unfair.
Ned Puddleman
January 7th, 2011
9:30 pm
It seems pretty simple to me. Either have an income tax or a sales tax but not both. But first, define what is a legitimate function of state government. Then figure out a logical way to fund it.
b6542
January 7th, 2011
9:36 pm
“97 page monster”…….I wish. Check the size of the IRS code
atlanta mom
January 7th, 2011
9:48 pm
Sales tax has to be the most regressive tax out there. Ranks right up there with not taxing the elderly because $80,000 was not enough of an exemption.
Tell the truth
January 7th, 2011
10:03 pm
I think the changes are absolutely disastrous. Could they possibly hurt the poor and elderly any more?
And to think that with all of the budget shortfalls over the past several years and then the Republicans substantially reduce the income tax on WEATHY seniors last year. Most seniors in Georgia did not need the reduction but the Republicans continue to pander to the wealthy to the detriment of the little man!! Frazier is a sell out and the committee is a total joke. Sales taxes are the most regressive type tax there is. And they always hurt the little guy and the poor. Typica Republicans and the voters in Georgia continue to elect the idiots.
no free advise
January 7th, 2011
10:09 pm
If you would like to pay my std hourly rate, I would be more than happy to post useful advise
South GA Retiree
January 7th, 2011
10:13 pm
The added 4% tax on groceries is without doubt a burden on the middle class and a nail in the coffin of the poor. Those who earn a meager living will be forced to make harder choices for themselves and their children. Many who are near the Medicaid threshold will be pushed to apply and use it. These folks don’t make enough to pay state income taxes now, so income tax relief would mean nothing to them. This is unconscionable punishment for something that is not their fault.
Imposing a sales tax on individuals making car-to-car sales was tried several years ago with disastrous results, as I recall, and was quickly reversed.
I’m a retiree, over 65, and I can deal with the elimination of the exemption on income taxes for seniors. It will hurt, but I can deal with it, although many seniors will suffer if it is taken away.
What’s wrong with adding graduated income tax rates beyond 6% for wealthy folks? It won’t pinch them to pay a more proportionate rate for significantly higher incomes, and they can still easily maintain their standard of living.
More of the “good old boy” sales tax exemptions need to eliminated and, at the local level, a host of property tax exemptions need to be dropped.
There are so many things that can be done to make revenue-raising in Georgia a fairer game, and that’s what it is, a political game. As far as I’m concerned, the Council has failed the majority of Georgia’s citizens. These recommendations only reinforce the current inequitable tax code.
atlanta mom
January 7th, 2011
10:16 pm
@no free advise
I don’t pay for advice from someone who can’t spell the word
Coastal Cavalier
January 7th, 2011
10:19 pm
Just so you realize…we are paying 2% on groceries now. They want to increase it to the standard 4%. Food would still be exempt from the LOST fees. Georgia has one of the lowest gas taxes in the country. Couldn’t it be increased 2 cents to pay for the almighty trauma program and another 2 cents to go into the general fund?
smart dawg
January 7th, 2011
10:22 pm
I realize the state is between a rock and a hard spot.
I’m not so sure this plan is the way to correct it.
Given the choice of an income tax vs a consumption tax, I will always choose the consumption tax.
Looking at the revenue charts for the last several years on page 8, it is obvious that the shortfall is partially due to underemployment and the general malaise of the economy. From FY2008 through FY 2010, the deficit is over 2.2 billion.
Is this the time to add more taxes on the backs of those who are struggling? I think not.
atlanta mom
January 7th, 2011
10:25 pm
@smart dawg– if you choose the consumption tax you are adding taxes to the back of those who are struggling.
Just Nasty & Mean
January 7th, 2011
10:31 pm
FORGET THIS TAX BS!!! Cut the budget 1st! Cut the Budget before raising taxes. I don;t trust these bloodsucking bureaucrats and politicians to do their job on cutting excess costs if they can get a fat new source of money.
CUT THE BUDGET 1st!!!!
ray
January 7th, 2011
10:33 pm
Was it ‘fair’ that these silver spoon republicans had wealthy daddies who bought them college degrees?
Is it ‘fair’ that the GOP burned down the country, but it’s the middle class who’s taking the hit?
Is it ‘fair’ that these self-proclaimed keepers of Christianity have no problem giving Christ the finger with horrific effort to take meals from the middle class so they may have flat-screen TVs in their bathrooms?
Spoiled, wealthy, unAmerican white trash posing as governmental leadership.
smart dawg
January 7th, 2011
10:36 pm
atlanta mom,
Not always. See the dudes with the 22’s and the bling? Think all their funds came from their paycheck where taxes/fica were withheld? Think again.
Actually, this whole thing could be resolved with the fair tax.
Just nasty & mean,
You are so absolutely correct.
RBN
January 7th, 2011
10:37 pm
Great, let’s copy Texas with a $25 billion whole in a $98 billion 2 year budget. Provide some type of low income credit to protect increase in grocery tax, but this looks like a massive shift of the tx burden from the haves to the have nots. That is what happens when working people vote against their economic interest.
atlanta mom
January 7th, 2011
10:39 pm
@samrt dawg,
Even the fair tax exempts food
Son of Mitch
January 7th, 2011
10:40 pm
@Just Nasty and Mean….take a look moron – the damn budget has been cut $4 billion over the past 3 years. You are happy to cut as long as you et your traffic reflief, education, and share of services. Try to do a little research before you post dumbass comments.
Tom
January 7th, 2011
10:43 pm
Zell Miller was an idiot for ever taking the tax off of groceries to begin with. The General Assembly members are morons for continuing to cut taxes to look good to voters while basic services in this state suck. Any legislator signing a no tax pledge is a legislator with no ability to think and lead as necessary. Are you listening Chip Rogers???
dano
January 7th, 2011
10:45 pm
atlanta mom….you go girl….rflmao!
smart dawg
January 7th, 2011
10:49 pm
atlanta mom,
food exemption works for me
atlanta mom
January 7th, 2011
10:57 pm
smart dawg,
It’s way to late for me to be looking at charts. If you exempt food in this whole plan, what happens?
Is it still viable?
This is Mrs. Norman Maine
January 7th, 2011
11:05 pm
But they DO want to maintain tax exemptions for corporations. I will give it to them, they know where their loyalties lie. The poor, the elderly, the sick and the dying are not on the top 100 list of priorities for anyone in power in this state and least of all the GOP.
I thought the right wing’s mantra has always been to cut/eliminate taxes and cut spending and nirvana will flow. Now they get to eat their words.
smart dawg
January 7th, 2011
11:10 pm
The charts I referenced were for revenues received for the last several years and projected totals for 2010.
I didn’t see a projected amount expected by taxing food in the appendices.
Rich
January 7th, 2011
11:18 pm
The lottery is a tax, and they want to tax it? Sales will drop and HOPE will be a bigger issue
Mike
January 7th, 2011
11:20 pm
I make $70,000. Please tax everyone who makes more than $75,000 and no taxes for under $75,000.
smart dawg
January 7th, 2011
11:20 pm
The lottery is a voluntary tax.
double
January 7th, 2011
11:50 pm
Where is Eatmotacos?I would like very much to hear his/her input.
GAPolitico
January 8th, 2011
12:03 am
I am not CPA or Tax Attorney, though I did get an A in my grad level public budgeting and finance course last semester.
These tax changes will take an already regressive system and make it even worse: http://gapolitico.com/?p=16655
The tax burden will shift even more heavily on the lower and middle classes. People below $12k will see their income go up. It will increase taxes on groceries. It will increase taxes on car services and cut taxes for the rich in our state.
We must get the word out and we must defeat these proposals.
Avery
January 8th, 2011
1:42 am
Our disgraced former speaker thought he could replace the property tax by taxing these untapped sources. Turns out the study he used was nonsense and he dropped the idea. Now we aren’t replacing anything, the state just needs more money so they will use this areas to raise money.
Pretty pathetic – at least in some other states you get parks,better food quality, or transportation when you pay taxes – in Georgia you don’t seem to get much of anything except a school system ranked near the bottom and an obesity epidemic.
I guess the politicians get free bankruptcy bailouts and sweetheart property deals.
El Kabong
January 8th, 2011
3:51 am
@Just Nasty & Mean-Amen! Stop the vote buying and politicians retirement programs. Cut the budget. Start with the Oaky Woods deal!
Derbfan
January 8th, 2011
5:20 am
Get rid of the retirement income exclusion. It’s currently set at $35k per person and kicks in at age 62. Old people should be taxed more than workers, not less. Let them move to Florida and we get our streets back!
Willie1
January 8th, 2011
6:09 am
I would start with taking away state tax credits for donations to private schools. It is absurd to give a dollar for dollar state income tax decrease for donations to private schools when no such tax attribute exist for voluntary donations to public schools. Private Schools are called private for a reason and should not be funded by the state government. Analysis defined benefit pension plans (mostly for Govt workers) vs defined contribution plans (these comprise most non Govt retirement plans). If real estate is to be taxed let it be based on cost not fair market value. Elect managers not populist. Simplify the federal tax code this is what state income taxes are based on. When rules become so complex that people can’t comply when they are willing, many others simply quit trying to comply. Make all interest deductible this would be very stimulating and people would then have their cars repossessed instead of their homes (this was the policy pre Reagan). Make it harder to change every little rule (most are politically motivated) to create stability and let the elected officials merely adjust rates. Look hard at non profits which pay no tax but pay exorbitant salaries to employees (athletic associations etc). Don’t allow for retroactive tax changes such as the out of state like – kind exchange rule. Subject all law makers to income tax audits. Imposing a sales tax on services will be very difficult to enforce. Imposing a sales tax on essential medical services is the worst idea I have ever heard of. The reason the tax code is so complicated is because the Govt want’s to take more of your money with out telling you they did. For instance hardly anyone gets to deduct medical expenses anymore but most people think they do. People who do not itemize get no tax benefit from contributions to televangalist etc but many of the people who do this think they do. I have rambled enough.
BitterEXdemocrackkk
January 8th, 2011
6:13 am
FAIRTAX for the country AND Georgia!
tennessee tom
January 8th, 2011
6:14 am
putting more taxes on food,is criminal,in these hard times,the sales tax in ga in almost the same as it is in Fla and TN,yet both those states have no income tax,a car tag in TN for any automobile is $22.00,guess Ga is trying to catch up with the New England states in Taxes,I thought the lottery was the cure all answer for these problems,but leave it to the politcians to piss your money away.the trouble with these people is that will never be enough money,requardless of how high the taxes get,they will want more.
khc
January 8th, 2011
6:59 am
require independent cost benefit analysis on all corporate taxes/tax breaks for starters with published results. incorporate a more progressive income tax structure (Ga cap of 6% since when about 1950s or so). but thresholds wider. too much wealth and income disparity in this country as it stands now. wish there was way to help disadvantaged but not the lazy or shadow economies…
tax on professional services like legal, accounting, investing fine, but not on haircuts, day care, etc ie were cost of compliance not as burdensome to taxpayer or state
let some other state test the fair tax (consumption) before GA tries it
Rawmilkdrinker
January 8th, 2011
7:30 am
5% tax on politician’s arrogance and a 10% tax on political stupidity and ignorance would put money in every pocket and two chickens in every pot of the state’s residents.
Last Man Standing
January 8th, 2011
7:41 am
no free advise:
. . . only if you learn The difference between “advise” and “advice”!
Johns Creek resident
January 8th, 2011
8:30 am
This report is a starting point but it should not be approved as it is. Legislators must make some modifications to the proposals to make them acceptable. The report is disingenous in its calculation of the cigarette tax for example. The calculation is skewed by the tax charged by Florida. A more appropriate tobacco tax would be 49 cents per pack instead of the suggested 68 cents tax.
The sales tax on casual sales of personal vehicles also makes no sense. We tried this once and it failed. A more reasonable goal is to lower the personal income tax rate to 5% instead of to 4%. Imposing the sales tax on food did not make sense in the past and does not make sense now. I completely agree with elimination of credits based on age instead of income. The wealthy elderly do not deserve another tax break. Why is it necessary to keep the tax credit for energy and water efficiency while eliminating all the other credits. The energy credits should also go.
I hope the state legislators vote this proposal down and implement an improved proposal that includes citizen review of the proposal.
the original and still the best John Galt
January 8th, 2011
8:41 am
The first thing that struck me about the report as I briefly skimmed it last night is that the commission apparently didn’t even look at point of sale collections of Sales Tax. This was a major platform plank of several gubernatorial candidates but the tax commission doesn’t even mention it that I saw. (khc and I discussed POS collections and whether or not the tax commission would consider such several days ago on here.)
I’m not sure that a point of sale system would work, but I believe the state would do well to consider it.
Once again at first glance it’s obvious to me that an establishment commission has done an establishment job.
Woe is US
January 8th, 2011
8:44 am
Contrary to “Fair” tax advocates the poorest already pay a higher effective percentage of their income than the rich. More than double in some cases. (see the non-partisan Institute onTaxation and Economic Policy or ITEP) This is a more REGRESSIVE tax meant to shift the tax burden from the well off to the middle class and poorest. These new proposals only make Georgia’s tax structure less fair. Wake up citizens! Your bought and paid for government is selling you a pile of manure. Why not eliminate the legislature which is just in business to skew everything in favor of the most well off and special interests. Republicans are the cause of our economic distress, NOT the solution.
pissed in ga
January 8th, 2011
8:54 am
This will hurt the middle working citizen and the poor. I am fortunate to be ok but did not come from wealth and sugar daddies. I worked and invested for what I have. I am sick of Republican crooks and thats just what they are, spoiled rotten from well off family. Don’t make the poor and working class suffer anymore. CUT THE BUDGET! Just like the OK Woods deal with the state paying out the nose for swampland. The bears and wildlife have plenty of habitat. That was a travestity and embarassment to the citizend. Perdue and his cronies should have their ASS taken to the woodshed and whipped royally. Deal is no better, a shyster and crook behind a religious facade. How can you forget a 2 million dollar loan. He will be dealing under the table. This state is in a mess.