Your state Capitol is about to become the scene of a collision of giants, with Amazon.com on one side, and an army of brick-and-mortar retailers on the other, including Home Depot and Walmart.
The referee, oddly enough, is likely to be a Washington activist you’ve never heard of -– but whose very name can strike fear in the hearts of Republican state lawmakers. And loathing, too.
Two Mondays ago, Grover Norquist, president of Americans for Tax Reform, appeared in Atlanta before a group of conservative activists and lobbyists. His group presents pledges to Republican candidates across the country, demanding that they promise never to raise taxes. Ever.
On this day in Atlanta, Norquist refined his definition of what a tax increase actually is. If a government expands its tax collection system, and takes in more cash as a result, then that’s a tax increase. It is a novel interpretation subject to some examination -– Ronald Reagan, for instance, often spoke of increasing tax revenue by lowering taxes.
Still, Norquist’s extended definition raced through the Capitol like bad news, which, to many, it was. As have other states during these hard times, Georgia has hired more auditors for the Department of Revenue to target tax scofflaws.
But Norquist doesn’t deal in small change. After that speech, Norquist had a one-hour sit-down with Gov. Nathan Deal, who days earlier had announced that he was ready to go after the sales taxes that ought to accompany the purchases Georgians make over the Internet.
Not a tax increase, Deal’s people insisted. “It’s current law that all retail sales are supposed to pay a sales tax,” said Deal spokesman Brian Robinson. “It’s about collecting taxes that some outlets aren’t paying when they are supposed to.”
“E-Fairness” is the shorthand phrase. The Georgia Retail Association estimates that uncollected sales tax from every Internet sale to a Georgia resident might hover in the range of $500 million a year.
Internet sales also constitute a philosophical loophole that Republicans in the Legislature can’t ignore. Their long-term goal is to shift state government away from its reliance on property and income taxes, and toward consumption taxes. A foolish and inequitable thing to do if you can’t tap the fastest-growing area of retail sales.
But for now, state lawmakers are content to limit themselves to online’s biggest dog: Amazon.com, whose sales in Georgia might equate to $20 million in new tax revenue each year.
Behind the push are the state’s on-the-ground retailers, large and small. Carrying the most clout at the Capitol is Georgia-born Home Depot, second largest retailer in the nation and the supplier of thousands of jobs in the state. “All the large retailers are engaged. You name it, they’re involved in it,” said Rick McAllister, president of Georgia Retail Association.
The argument: Brick-and-mortar retailers in Georgia are being placed at a 6 percent or 7 percent disadvantage in the middle of a recession. “It’s a tax that’s due. Some of us have to collect it, others don’t,” McAllister said.
Taxing the Internet is a complicated chore. According to current federal law, a company is obliged to pay a sales tax only if it has an actual presence in that state – a “physical nexus.” Amazon.com has no facility in Georgia.
A bill in the works will attempt to tax Amazon.com’s advertisers – “affiliates” that have a physical presence in the state, said state Rep. Matt Ramsey, R-Peachtree City, who is drawing up the measure.
He has small shop owners in Fayette County who complain that they now serve as showrooms for their Internet competitors. Shoppers will come to their stores to get a feel for the item – a grill, a drill, a toaster – and then place their order, via their smart phones, with an Internet store for the tax-free discount.
“That’s just not fair to me. I think that is tantamount to corporate welfare,” Ramsey said. The lawmaker said the bill will include an offset so that the state posts no revenue gain from the bill. Perhaps, Ramsey said, the state will reinstate those sales tax holidays that disappeared at the start of the recession.
Kelly Cobb, an ATR spokesman, said the fact that Georgia would show no revenue increase was encouraging, but that Norquist is still likely to condemn the bill as poor policy — an attempt to expand taxation to an area now placed off limits by federal law.
Americans for Tax Reform, by the way, doesn’t reveal the sources of its funding. Lawmakers around the Capitol remember that Norquist opposed a 2003 effort by Gov. Sonny Perdue to raise the state sales tax on tobacco products. Only several years later was it revealed that tobacco companies were among ATR’s major underwriters during that period.
- By Jim Galloway, Political Insider
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169 comments Add your comment
Centrist
February 11th, 2012
9:17 am
Liberals like Mr. Jim Galloway always want more taxes. Internet sales tax would be new. TSPLOST would be new (along with ANY SPLOST).
Liberals pretend tax increases aren’t tax increases, and castigate anyone who says otherwise.
Roy Jones
February 11th, 2012
9:25 am
These ppl proposing this are all Republicans. With the goal being more regressive taxes than actually using income as a factor. Time to get out of the bubble.
Centrist
February 11th, 2012
9:28 am
Taxes are a percentage of income, sales, and property values – so they automatically INCREASE with inflation and greater population. But governments (especially liberal ones) always want a greater percentage as government grows faster than inflation and population.
Folks like Grover Norquist, president of Americans for Tax Reform and TEA (Taxed Enough Already) party members are saying enough is enough. Government is already too big, and growth greater than inflation and population is going to be both stopped and reversed. Liberals can always find new reasons for bigger inefficient, parasitic bureaucracy government growth.
liberalefty
February 11th, 2012
9:32 am
paying for dumb wars started by fragile ego driven cowardly chickenhawks cost us taxpayers too much….
George P Burdell
February 11th, 2012
9:40 am
Centrist, did you even bother to read the article?
“Not a tax increase, Deal’s people insisted.”
If I read your comment, you also consider Nathan Deal and Matt Ramsey to be Liberals who “pretend tax increases aren’t tax increases, and castigate anyone who says otherwise.”
Jim Galloway is only reporting the comments from both sides; apparently this is still a sin among need JERK idiots.
DannyX
February 11th, 2012
9:42 am
“Liberals like Mr. Jim Galloway always want more taxes. Internet sales tax would be new. TSPLOST would be new (along with ANY SPLOST).”
Another remarkable case of paranoia displayed by our so-called Centrist. TSPLOST is a product of our conservative Republican state government. It has nothing to do with liberals. Nothing at all. Conservative are 100% responsible for TSPLOST. Our conservative Republican dominated state elected officials are so afraid of King Norquist that they cowardly punted the TSPLOST decision to the voters so they could honor their blood oath to the King.
In fact TSPOST should be an example of why our conservative Republican state government should stay the hell away from tax matters altogether. They will mess it up. They can’t be trusted. There will be 1000 lobbyists attempting to vulture the bill to favor their narrow interests. With our government for sale the outcome will not be good for the taxpayer.
Any attempt at an online tax collection bill has to get the approval of Georgia’s King Norquist. Who voted for this God?
howardchronicle
February 11th, 2012
9:57 am
I have found that reading the tax increase and Amazon from the end first up to the begining makes the article more cogent. The small shop keeper is a relic from a bygone era. Let Amazon sell without paying a tax. If Amazon pays taxes on what it sells in the state, what is to stop Syracuse from charging the 20% that will waTCH SU play Connecticut today on the internet, 12 noon. This is a game for the ages,now that SU will play in the ACC, this rilevary will be in the archives and SU can start dominating Duke and North Carolina.
Art Townsend
February 11th, 2012
10:03 am
The 9 Georgia Members of Congress who signed Norquist’s Taxpayer Protection Pledge (atr.org) appear to be in violation of Rule 6 of the Code of Ethics for Government Service which states “Make no private promises of any kind binding upon the duties of office.” Read about the Code at Pages 20 and 436 of the House and Senate Ethics Manuals, respectively, at http://www.ethics.house.gov and http://www.ethics.senate.gov. The Governor, 14 State Senators and 40 State House Members who have also signed this pledge (atr.org) are not covered by Rule 6 of the Code of Ethics for Government Service but should agree with its spirit and intent. They may be violating a Georgia Code of Ethics or their Oath of Office. Confront your lawmakers about this Pledge and demand they publicly renounce it in both thought and deed.
Newtewt.
February 11th, 2012
10:08 am
All “The Grover” wants to do is bury Americans permanently w/ debt….Sure, we can cut ALL taxes; but the politicians on both sides of the aisle will continue to spend what we don’t have. Grover can put his organization where the sun don’t shine.
Say NO to the MATT TAX
February 11th, 2012
10:18 am
This is an increase in state revenues collected from the individual, i.e. TAX!!!! Re-instating a temporary sales tax holiday to “offset” the new tax sounds like Washington math to me.
Douglas G Erwin
February 11th, 2012
10:23 am
A store located within a taxing jurisdiction receives value for their taxes. ie. police and fire protection, public infrastructure and the like. What benefit would an on line retailer in another state get for the taxes they would be forced to colect for another state?
View From Midtown
February 11th, 2012
10:27 am
Of course Republicans want to tax the Internet; conservatives always hate progress. But seriously, this philosophical move to make state revenues entirely dependent upon sales taxes while eliminating property and income taxes is incredibly dangerous, though nothing new. Not long before the Bush Recession, it was named (in a blatant attempt at propaganda) the GREAT plan and championed by former speaker (and ethical and moral failure) Glenn Richardson and his legislative collaborator Earl Ehrhart. And had it been in place when the Bush Recession hit, it would have bankrupted the state of Georgia due to the dramatic drop in consumption. Even with the diversified tax base that was in place, it took radical cuts and a bailout of a billion dollars of federal stimulus money to balance the budget. (Up at the Gold Dome, they like for you to forget about that federal bailout).
Simply put, and as everyone with common sense knows, you don’t put all your eggs in one basket.
Jeff Sexton
February 11th, 2012
10:34 am
Is there any wonder that Matt Ramsey, who nearly single handedly killed the agriculture industry of South Ga with his asinine HB 87, is now targeting the eCommerce industry? Face it: Matt Ramsey and his cohorts want nothing more than for every single business in Ga to fail, unless said businesses pay into their own pockets.
Edward Ruffin
February 11th, 2012
10:48 am
That this “new’ source of “revenue”, ie taxes, will be revenue neutral is the biggest lie since Sonny Perdue promised a fair vote on the state flag.
Scott
February 11th, 2012
10:58 am
‘According to current federal law, a company is obliged to pay a sales tax only if it has an actual presence in that state – a “physical nexus.” Amazon.com has no facility in Georgia.
A bill in the works will attempt to tax Amazon.com’s advertisers – “affiliates” that have a physical presence in the state, said state Rep. Matt Ramsey, R-Peachtree City, who is drawing up the measure.’
This idea is doomed to fail. California (and other states) did the same thing and Amazon closed its affiliate program for all residents of California. As a result, many California small business owners were forced to shut down or move their business to another state. The end result will be less taxes and fewer businesses in the state.
Hello legislators! Didn’t you see what happened in these other states?
Chaos
February 11th, 2012
11:00 am
Seriously? Here we go again with winners and losers in the Capitol “We are gonna increase taxes, but tell you we aren’t, wink, wink” game. The same game was played last year in the Tax Reform Bill that targeted only certain services for taxation, but not all services. If it weren’t for several gutsy north GA republicans in the House saying no, it would have made it to the floor for a vote.
If the folks at the Cap want to tax online retail, then do so. Just “man-up” and tell it like it is. But to target only one online retailer is equivalent to bullying…and I hate a bully.
Amazon Seller
February 11th, 2012
11:05 am
I am a small third party merchant that sells on Amazon. I sold $2,000 worth of books to Georgia Residents. Amazon did not collect from the buyers and pay Georgia the sales tax. Since I live in Georgia, I paid the sales tax for my customers out of my income. I file a Georgia sales tax return every year. That is the only right thing to do. Most third party merchants on Amazon, big and small pay their respective state’s sales tax.
Brick and mortar stores, its not just the sales tax, things on Amazon are flat out cheaper! Lower your prices if you want more business. Don’t blame Amazon, look at your own business model and adjust.
MrLiberty
February 11th, 2012
11:09 am
If the point of a sales tax is to support the infrastructure of government that protects the marketplace and a court system for adjudicating desputes, then the sales tax argument against Amazon is pure BS. The state of GA does nothing to support the activities of Amazon. As for any crap about road, etc. the mechanism by which product is delivered (USPS, UPS, FedEx) already pays the appropriate taxes on fuel, registration of vehicles, etc. so that argument is pure BS as well.
Bottom line is that the state government is greedy, brick and mortal retailers are whiny, and as usual, they are using the power of government to screw the consumers once again.
Government has costs associated with it. Shut down more government and there will be far fewer costs. If sales taxation is not a prudent or effective mechanism for collecting revenue in this changing economic environment, then come up with something else. Or better yet, open up all government service monopolies to free and open competition from the private sector and see who delivers the best service at the lowest cost and see what services the market actually wishes to support. Now that would be both eye-opening and freedom-restoring.
Government is, and has always been the greatest drain on freedom, innovation, and liberty in any society. Its purpose is simply to protect rights, but since virtually the beginning of this country is has served to protect “connected” businesses from the competitive free market.
The good ‘ole boy network in this state (both sides of the aisle) has protected its favored business friends for far too long. Time to restore liberty and freedom and Amazon and its innovative approach to retail represents the best of both things. Go Amazon.
Native Atlantan
February 11th, 2012
11:21 am
I’m as liberal as they come but I believe in a level playing field — collect taxes on internet purchases. A dollar spent online and not taxed is a dollar not spent locally and taxed.
Karen
February 11th, 2012
11:24 am
Centrist should marry Norquist, whoops not legal in Georgia.
td
February 11th, 2012
11:30 am
Newtewt.
February 11th, 2012
10:08 am
What Grover is doing is forcing government to get smaller. Government should return to its primary role of protecting the citizens safety and rights. It is the responsibility of the people to provide for themselves.
george
February 11th, 2012
11:39 am
my wife and i have shopped on the internet for years for everything for computers from dell, cell phones from verizon and att, clothing from lands end, j crew, etc.each company has collected sales taxes at the time of sale so the software is available. amazon just wants another advantage over brick and mortar retailers. even walmart collects sales taxes on its web orders. norquist is yet another rich kid who avoided military service and peddles influence to the highest (undisclosed of course) bidders. he has yet to repay harvard for that part of his education subsidized by government grants.
George Hills
February 11th, 2012
11:39 am
Legislators claiming it ain’t taxation is like Mr. Gingrich claiming the 1996 Misdemeanor Gun Ban he helped pass ain’t gun control. That dog don’t hunt.
Keith Yockey
February 11th, 2012
11:44 am
King Grover is wrong on this one. It is not a new tax. GA has laws on the books now to collect said tax; it’s called Use Tax. You buy online, you owe Use Tax. Until Congress gives the green light, GA will be unable to make any law to force out-of-state online retail to collect/remit GA Sales Tax.
As to the affiliate nexus law. That violates the commerce clause and is being challenged in NY and IL. In many States where this was attempted (NC and IL for instance) The Dept. of Revenue not only saw little return from the law, but also a drop in income tax as companies dropped affiliate programs and businesses moved to more tax friendly States.
roughrider
February 11th, 2012
11:53 am
@ Centrist
” Liberals like Mr. Jim Galloway always want more taxes”
Since Sonny Perdue was elected Governor and the Republicans took over Georgia, our taxes sure have jumped.
Norquist Weighs In But A Bill Moves Forward — Peach Pundit
February 11th, 2012
11:54 am
[...] Tax Reform weighed in and he didn’t like it. Nevertheless some in the House appear ready to move forward with a bill: Taxing the Internet is a complicated chore. According to current federal law, a company is obliged [...]
DannyX
February 11th, 2012
12:00 pm
“It is the responsibility of the people to provide for themselves.”
Unless your name is Arthur Blank. Then the state will hand you a $400 million gift from taxpayers to help build an unnecessary football stadium.
Great idea! Why not build Amazon a huge $400 million dollar distribution center with taxpayer dollars.
Buckhead Boy
February 11th, 2012
12:04 pm
Ho hum. Just more of the Republican drive to transfer any tax burden from the monied interests through regressive taxation. But, nothing strikes me funnier than when a Republican candidate rails against the estate tax before a cheering gaggle, none of whom cheering is likely to ever inherit or accumulate an estate valued at more than the $5 million deduction.
Centrist
February 11th, 2012
12:17 pm
There is no doubt that former Democrat Governor Deal has no compunction about raising taxes (TSPLOST and internet). Last year there was an attempt at hiding net tax increases inside of tax reform proposals that were purposely incorrectly termed as revenue neutral. Democrats and liberals like creeping socialistic tax increases; TEA party members, Grover Norquist, and the Americans for Tax Reform don’t. Voters are watching to see how tax reform with hidden net tax increases, added/extended SPLOST taxes, and now the proposed internet added tax evolve. It will eventually be up to them to endorse or reject those who want yet bigger government and higher taxes.
It has been pointed out around the country and even here that internet corporations not residing in Georgia do not benefit from local taxes as do Georgia based companies. It is also shown that Georgia based sellers do pay sales and income taxes. But governments almost always push for growth – some at greater rates than others. Deal’s administration may not be as growth hungry as Barnes’, but it certainly is not conservative.
double
February 11th, 2012
12:32 pm
Here in Tn. we are in the process of sales taxing Amazon(which is located here)Above mentioned walmart online sales taxes.I would think walmart was in all states.If the company is not in state,no sales tax should apply.Reduce size of Gov.and good ole boys favoritsm,both parties,of the one party.
double
February 11th, 2012
12:33 pm
favoritism
Centrist
February 11th, 2012
12:36 pm
double posted “Here in Tn”
Whoa, back the truck up (beep, beep, beep). You mean to tell me that you have been posting here about local Georgia issues and have not been paying the 6% Georgia state income taxes, real estate taxes, ad valorum taxes, state sales taxes, local option sales taxes, SPLOST sales taxes, or gasoline taxes??
double
February 11th, 2012
12:41 pm
There you go again with your Ad valorem…You mean I’m not allowed to cross the line?Where is the filter.6% all you have? which county you in?
frugal voter
February 11th, 2012
12:42 pm
The worst impact for state revenue is that internet sales will increase when (er “if”) we have an extra cent sales tax for T-SPLOST.
DannyX
February 11th, 2012
12:43 pm
“Deal earns 77% of the vote from those who are part of the Tea Party movement” according to a poll taken before Georgia’s election.
Deal was campaigning throughout Georgia as the Tea Party candidate. Deal campaigned at countless Tea Party events. The internet is full of reports from those events.
Centrist is trying to change history, now calling Deal a “former Democrat.” What a joke.
REVISED…”Georgia Republican/TEA Party members like creeping socialistic tax increases.”
The Tea Party is dead in Georgia.
.
M
February 11th, 2012
12:50 pm
Came in here just to make sure Centrist was berating Galloway. Carry on.
Mr Dave
February 11th, 2012
12:51 pm
Can anybody tell me….How do you simplify all this crazinesst!!!
Keith Yockey
February 11th, 2012
12:57 pm
‘It has been pointed out around the country and even here that internet corporations not residing in Georgia do not benefit from local taxes as do Georgia based companies.’
Apples and Oranges. Those companies would be collecting taxes from GA residents and remitting to GA DOR. It is the GA citizens that would benefit from those taxes paid by Georgians. What benefits those Companies get is a local issue that’s covered by taxes paid for their respective home location.
In many ways, online is asked to subsidize B&Ms infrastructure needs. Less fire/police sanitation services are needed, and online does not need to ask city fathers for a bond issue to build a six lane highway to get to the mall, yet online (if a national law was passed) would be required to register/collect/remit Sales Tax for 45 States. Add to that the 10000 tax districts that are not defined by zip code as well as exemptions/inclusions for good types (peanut butter is tax free, yet peanut butter cookies are bc of sugar content). Compliance costs as well as audit risks make the whole subject unreasonable.
show me kid
February 11th, 2012
1:00 pm
I have had excellent experience buying items from Amazon, and I do enjoy not paying taxes on my purchases, but this is just not fair to retailers who hire people to work in their stores and pay property and sale taxes. We need to get off of the increase or not an increase bandwagon and do what is fair to all people and to generate enough revenue to balance the budget.
crackbaby
February 11th, 2012
1:00 pm
Please wake up, residents!
The legislature wants to exempt manufacturers from paying sales tax on utility bills. So where will they make this up? From consumers.
That is EXACTLY what is going on here. In order to exempt the state’s largest businesses from sales tax on electricity and fuel, legislators will shift this loss of revenue to the residents who live here.
Keith Yockey
February 11th, 2012
1:04 pm
@ Mr Dave
The solution is beyond simple. Have the Merchant Accounts (Visa, MC, PayPal, etc.) collect the tax at Point Of Sale. They remit the tax directly to the States (States pay related fees).~ States get instant funds, ~ invisible to buyers ~ reduces paperwork & related costs ~ system would work for B&Ms as well as online.
http://www.thedumbdog.com/blog
http://www.facebook/com/groups/stop.sales.tax.fees.now
David Wilhoit
February 11th, 2012
1:05 pm
Screw these criminals. Let’s tax internet sales, while loosely promising it will result in lower property taxes, while at the same time, raising the sales tax, and keeping a painful state income tax, in the most financially unstable state in the contiguous 48. We don’t even discuss toll roads and pay-for-play hot lanes. How are we funding the toll road projects on 575? Sales tax and gasoline tax. If any of you, ANY, believe that taxing internet sales will result in us getting lower taxes anywhere else, then I beg you not to breed.
The whole purpose of this is to screw the middle and lower class, again. We’ve got a way to shop and save money, by shopping online, saving the hours at brick and mortar stores and the fuel costs of driving. So yes, please, let’s take that away too. How dare the middle and lower class find a way to survive without giving the criminals in the congress and senate their cut?
I can’t wait…just 10 more years, when the middle class has disappeared, then the revolution can begin. And these people won’t get voted out of office, they’ll get carried out.
Music City Dawg
February 11th, 2012
1:06 pm
Its time to level the playing field that requires EVERY corporation to pay their fair share and at a flat tax rate. Ultimately, it would lower the tax rate and could very well lay the ground work for eliminating personal income tax. However, if there is a personal income tax, it should be at a flat rate as well with EVERYONE participating. As long as Gov’t (at all levels) held their spending, we’d probably have more money available for funding important Gov’t items (defense, infrastructure etc.) as called for by the Constitution.
Bruce
February 11th, 2012
1:06 pm
No physical presence should mean no taxes. It should be the responsibility of the state that the entity is located in to collect the taxes if they so see fit.
show me kid
February 11th, 2012
1:07 pm
It has been pointed out that Amazon does not benefit from taxes collected in Georgia. I hope that these people realize that Amazon would not pay taxes-their customers in Georgia would pay these taxes.
Sparks
February 11th, 2012
1:09 pm
When will people begin to understand that just because someone claims to be a Republican, it doesn’t mean they are a Conservative. AJC loves to spin it when a Republican runs afoul of Conservative values. Not really news at all.
Peter
February 11th, 2012
1:10 pm
I guess they are trying to make us less competitive. If we have to charge tax for every e-commerce sale, then either the profit goes down, or the buyer simply buys from another vendor.
Now how is that helping Ga business owners ?
Why would the state want to make Georgia Businesses less competitive ?
BobbyS
February 11th, 2012
1:10 pm
Two points to make clear:
1. This is not a new tax, it is just new legislation that will force some internet retailers to collect the tax rather than relying on the consumer to voluntarily remit it.
2. Amazon is already in support of separate Federal legislation that will legally permit states to require online retailers to collect sales tax. Amazon is tired of litigating laws like the one in this article in many states across the U.S.
The GA legislature would be wasting its time trying to implement stop-gap measures to get around existing Federal law – as someone mentioned above, these ultimately been unsuccessful in many states. Unfortunately, sales tax on internet purchases is inevitibly going to happen within the next few years regardless of the “affiliate nexus” laws states attempt to implement.
Metro Mensa Man
February 11th, 2012
1:11 pm
If it is a matter of taxes vis-a-vis jobs, many of you probably don’t know that Amazon once had a rather large distribution center in Henry County and shortly after opening it and sending out mdse, it closed. Nothing was ever said as to why it closed. I couldn’t prove it but my money is on the fact that GA wanted to collect sales taxes and Amazon said NO. Guess who won?
Tennessee and South Carolina both faced that same dilemma and both caved in because they (Amazon) threatened to not put a large warehouse (or two) in either state. Now, GA sits and has its collective thumb up it’s — while TN is getting TWO WAREHOUSES and a couple thousand jobs with them. Ditto South Carolina.
Our Republican lawmakers, meanwhile, wrestled with the problem of how much to spend and where to put the “Fishing Georgia” site so all 1,243 yearly visitors would be sure to come in and see it.
Even though I am a die-hard, right-wing Republican, this state’s Republican Party is perhaps the most inept and brain-dead I’ve ever come across in the FIFTEEN cities I lived in during my 38-year career.
Tony
February 11th, 2012
1:12 pm
To make a pledge of “No tax increase whatsoever” is IRRESPONSIBLE. Decisions should be made based on the needs of the state and fairness to all citizens. There is no reason we should let Nordquist or anyone else bully our state into making foolish decisions. I vote for candidates that I hope will look out for the interests of all Georgians.