Ending state corporate tax would be right move

Faced with a national government that’s on a forced march to socialism, it is encouraging to note that the Georgia General Assembly has begun to stake a different course — one that could actually provide economic stimulus.

An example is a bill introduced last week by state Rep. Harry Geisinger (R-Roswell) that would charge a one-time tax of up to $1,500 on the purchase of an automobile. The kicker is, however, that once the tax is paid, there’s no property tax levied on the vehicle. Ever.

It’s incentive, certainly, to buy a new car. In Cobb County, where the sales tax is 6 percent, the purchaser of a $30,000 vehicle would owe $1,800 just in sales taxes. Thereafter, the car’s owner would pay property taxes with tag renewals.

Incentive to buy a new car? Absolutely.

As introduced by Geisinger, the changeover would be phased in, starting next Jan. 1.

The new system, which applies to both new and used cars, would take effect for individuals when they first register a vehicle. Until that time, owners continue paying ad valorem taxes when they renew tags.

The state gains by initially collecting half the tax on sales of both new and used cars, a percentage that will drop to 45 percent. Local governments will get the other half, rising to 55 percent. In the 2010 year, locals will get at least the sum they collected from motor vehicle taxes this year.

One possibility, and one danger, is that once the “birthday tax” is eliminated, legislators will rush to add new levies onto personal vehicles.

One such possibility is a tax that would go to subsidize hospitals providing trauma care, an idea advanced by House Speaker Glenn Richardson (R-Hiram).

These things are routinely called “fees, ” even by Republicans who know better. If a service — trauma care, for example — is financed only by users, it is a fee. If it is financed by others, it is a tax.

Language aside, the bill would spur new-car sales and is, therefore, needed stimulus — though the effective date does need to be pushed forward.

The other legislation that sets Georgia on an independent course comes from state Rep. Tom Graves (R-Ranger), an up-and-comer who until it was disbanded last April headed the 216 Policy Group, a band of fiscal conservatives who got together to study pending legislation.

His proposals include some business tax reductions designed to promote job creation.

One is an income tax credit of $2,400 for every unemployed person hired and kept on the payroll for at least 24 months.

The biggie, though, is the declaration that starting in 2012, the 6 percent corporate income tax, which nets up to a billion dollars per year, would be reduced by half a percentage point per year for the next 12 years, when it will be gone completely.

For conservatives, it’s a bold, straight-up and unapologetic statement of a policy objective: the eventual elimination of the corporate income tax. It’s good policy that will make Georgia more competitive and should eliminate the need for most tax giveaways now employed to lure new businesses. Besides, businesses pass taxes along as higher prices.

Declaring intent up-front should, too, keep the critics from taking cheap shots when Republicans grant a business tax break, such as the one now pending to give a tax exemption to Savannah-based Gulfstream on parts used in repairing out-of-state aircraft.

The stereotype is that Republicans sneak around to give tax breaks to their buddies in Big Business. It’s a staple every year, fed by groups on the left that want more money for social programs.

Trying to reduce corporate taxes one piece at a time — the same strategy by which Obama Democrats are creating universal health care — is political suicide for Republicans.

Declare it and do it so that every piece is not deviousness, but intentional movement toward a declared purpose.

Congress heaps mandates, regulations and other pass-along costs onto business. Georgia’s aim is to get part of their burden off.

Good policy, recession or not.