Thinking Right’s weekend free-for-all. Pick a topic:
● Tax code revision needs a father — an advocate with passion explaining what we’re trying to achieve — beyond, of course, the buzz words. Gov. Nathan Deal, the only elected official who qualifies, may or may not want to make this his issue. But if Republicans intend to create and give philosophical grounding to the vision Deal expressed in his State of the State — “We are now entering an era of smaller government and personal responsibility” — the tax code is a primary instrument.
● Deal should pick and choose from, but not on a dare take intact, the suggestions of the 11-member Special Council on Tax Reform and Fairness. No change should be called “reform” until it’s done. Then taxpayers can judge whether the changes proposed best serve those who pay — or those who spend. The spenders will find the proposals most attractive.
● An expansion of the sales tax to services, one of its recommendations, is a Pandora’s box with nearly unlimited potential to fund the growth of government. Whether Democrats or Republicans are in power, a sales tax on services is always a favorite of those who think politicians need more “flexibility” in raising revenues. It’s not something Georgians should embrace casually — and if it’s ever embraced at all, it should be limited and capped by the state Constitution.
● What’s so bad about a tax on services? As the 11-member panel notes, at least 166 services are taxed by one or more states. If you’re among those who believe that government needs more easily obtainable money, or if you believe that some professions are greedy and need to be punished by government, a tax on services is the ticket. The tax revision panel listed haircuts and services provided around the home, like maintenance, repairs and lawn care, as tax candidates. Bet the farm that whenever politicians need money, some other service will be taxed — and tax targets will not be able to resist because they are too few in number or are an as-yet-unformed class, like for example the currently soaked visitors renting cars at Atlanta’s airport.
● The special council’s tax recommendations do have some home runs. One is to examine the effectiveness of 30 tax credits given to promote economic development, conservation and low-cost housing. “The limited analysis that has been done [on economic development credits] suggests that only a small percentage of the jobs that received a tax credit were created because of the credit.” For low-income housing it was estimated at 30 cents of housing units for every tax credit dollar. Georgia really should find ways to stop tax giveaways to corporations and to developers. Lower and gradually eliminate the corporate income tax, but require everybody to pay their way for community upkeep and for public education. No free rides. Personal responsibility. Corporate responsibility.
● The council recommends lowering the personal and corporate income top rate from 6 percent to 4 percent. Yes, that rewards work over consumption, but unless it’s part of a working plan to eliminate the income tax entirely, the price in terms of taxes added is too high. I’d part with the tax exemption on groceries (which saves taxpayers between $472 million and $649 million per year), with the gimmicky “sales tax holidays” ($36 million-$47 million), with the exemption by 2016 of retirement income from the state income tax ($270 million) and commit the “savings” to eliminating the income tax — if, in fact, there’s a plan to take the rate, or even the corporate rate, to zero. About half the state’s revenue comes from the income tax.
● The standard deductions on Georgia’s income tax should be changed from $2,300 for singles and $3,000 for marrieds, set in 1981, to match the feds. That sum is $5,700 for singles and $11,400 for marrieds. Georgia’s code punishes marriage. All tax policy should encourage marriage, work and personal responsibility.