The GA legislature proposal of replacing property taxes with sales taxes is a bad idea. When I decide to move to North Fulton from Gwinnett, I paid for it. In my situation, for the “same house” I paid an extra $30,000 and annual property taxes are $500 more. However North Fulton government delivers better services. Policies that include valuing home ownership over transient living (e.g. Apartments), and smaller schools make North Fulton schools amongst the nations best. When I get my property tax bill I’m delighted to pay it. Even though it is higher than other counties, it is significantly lower than comparables in the Northern states.

I’m sure the legislature will propose some sort of system of accommodating historic funding level with the sales tax. But let’s face it, that exercise is fraught with corruption. By separating tax taking from tax spending, people don’t feel that their tax dollars mean anything. They lose touch with the good things their tax dollars do – and make sure it doesn’t get wasted.

Very on the point.

Would just about any tax system would be “fair” if incomes were “fair”…?

If life were “fair?”

Most political rhetoric avoids objective meanings.

I enjoy your posts, as a rule. I don’t want to over generalize.

Too much is already being said that means too little.

A major problem is that word “fair”. It’s subjective, which means that what’s fair for one is rarely so for someone else once you’re down to nuts and bolts.

Kirk

But, thought I’d jump in again.

When the Republicans were cutting income taxes for Paris Hilton et al, how was that supposed to be good for me?

That would be the selfish question to ask, wouldn’t it?

But, if cutting taxes for someone that doesn’t work (or does non-productive work) is good for the economy, it should be good for me. Right?

Is the argument that Paris Hilton would become more efficient in her conspicous consumption? Is it that we just need less wasteful rich kids? Is that what is holding our economy back from being the best in the world etc etc etc?

So much for humor.

Now let’s try being serious.

To study this concept that a fair taxation exists and must be implemented is exciting. But, the current theories being utilized are commodity pricing theories. In commodity markets, the product being sold is homogenous. Buyers and sellers can choose to not buy, or they can be compelled to act with perishable commodities. Peach crop. Watermelon crop. Strawberry crop. Demand can fluxuate wildly. Supply can be predictable. But, the underlying commodity is undifferntiated.

For example: One ounce of pure gold or silver. One ton of wheat. 1 barrel of corn oil. I gallon of gasoline or diesel.

The pricing theory being used by The FairTax book is from commodity markets because there are so few variables.

For example: There is no market for used barrels of gasoline. Used wheat. Used diesel oil. There is only a market for new, unconsumed product. (Used gold or silver would be in jewelry. It would have to be melted back into bars. As long as the bars were unused, they would still be new bars).

The issue of fairness in our current tax system is very simple.

The wealhiest people in a capitalistic system have gotten the most from the system. Therefore, they have the most to lose if the system collapsed. So, they should be very willing to pay taxes to keep the system working in their favor.

Whereas, the poor have gotten the least from the capitalistic system. Whatever is extracted from the poor to support capitalism perpetuates their poverty.

When somone can articulate how taxes can be fair in a capitalistic system, I wanna hear it.

Mad Dog.

A fair tax is a regressive tax that would cripple the economy in Georgia. It hurts the poor and small businesses. If you take money away from the poor in transfer payments to the state, then the federal government will be further burdened with pleas for state and local governments requesting federal grants to help with housing and schools. That money goes through to many hands to get back to the states through federal taxes that comes out of our pockets.

Just do an analysis comparing progressive taxes vs. regressive taxes, and do some research to see what happens when governments come up with new schemes of taxation. I believe the state tax in Georiga may have started at 1/2 % when first introduced or perhaps 1%.

We have got to cut spending now!

As a recent UGA grad, I have seen the zealotry of conservative ideologues in favor of the FairTax, but rarely hear them address the fact that eliminating the state income tax and placing the revenue burden on sales taxes is tantamount to raising taxes on students, most of whom do not pay state income taxes under the current scheme.

Some of you may think that college students on the whole are spoiled brats who should probably pay more in taxes than they do (I count myself among this group). However, I suspect that many students who claim they favor a FairTax would not be quite so vocal if it were framed as a tax increase on students.

I hardly hear the campus crying out, “Raise my taxes!”

Georgia offers better living. However, as I keep saying, you get what you pay for, and you have to pay for what you get. The reason Georgia’s able to offer that better living is because people pay the taxes to get it.

There’s the schooling. Yes, we comment and complain of Georgia’s overall performance being low on the national scale. But a comparison of Northwest Georgia to Mid-Central Tennessee is no contest – we do better on just about every measure. A not-inconsiderable factor in that is the fact that we get better teachers. The pay difference gives us more applicants, and we get our pick of the litter up here. Yes, we have educational problems, and I’ve my suspicions as to cause, but it’s not the teachers.

There’s the police and fire service. We tend to have more with faster response per capita. Our pay tends to be better – even after paying the income tax – and because our sales tax rate is lower we get to buy more with what we have.

College – HOPE – is a draw. But it’s one of several factors. And I strongly suspect that turning Georgia into Tennessee is a bad idea.

Thanks for catching my error. I was lookng at numbers from different sources that were as different as apples and oranges. I’m ignorant.

I lived in Fort Oglethorpe for a year as well as in Chattanooga for a year so I share your concerns about where consumers will go if Georgia were to enact a higher sales tax. But doesn’t this cut both ways?

If Georgia dropped its income tax, would it not help spur a population shift of people living in the Chattanooga area to Catoosa, Walker, and Dade counties? To an extent this has already started. These areas have all experienced a good amount of growth over the last decade, and one of the reasons was the HOPE scholarship. Many southeast Tennessee parents were moving to northwest Georgia to take advantage of the free tuition.

But now that Tennessee has started its own scholarship, I would think the incentives of moving to Georgia would not be as high. Would free college tuition PLUS no state income tax work to lure middle class families to Georgia?

One of my problems with the tax code ‘fixes’ is a point of confusion. “what we have doesn’t work” is a demonstrably false statement. Does it provide the state with the revenue it requires to continue operation? Yes.

Another objection that boggles my mind is the ‘complexity’ issue. There are two facts here. First, all one need do to get a ’simple’ tax is to use the 1040EZ. You will undoubtedly pay more taxes than you would by taking advantage of the complex forms – which brings up the second fact. The reason for the complexity is that we want to be fair, and want to encourage or discourage certain behavior – and sometimes reward or punish certain groups. Changing the structure of the income will not change the desire to be fair and encourage/discourage/reward/punish. It will appear to do so for a short time, but inevitably the new structure will gain in complexity as it is in turn tweaked for ‘better performance’.

I think, therefore, that any tax proposal must begin with a definition of what it means by ‘better’. From there two simple tests can be made. First, is the ‘better’ that’s proposed acceptable? Related, is the ‘better’ worth the short-term disruption caused by the change? And second, does the proposal actually meet the goal of ‘better’?

Michael C has presented an honest request for me to propose a ‘better alternative’. I don’t like the current income tax, but to borrow a phrase, it’s better than everything else. And as to the national FairTax, I’ve responded multiple times that it doesn’t satisfy its own goals of ‘better’. At best, it disrupts the system to end up in a condition just as convoluted. But that’s a separate issue from the current thread.

Kirk

Eliminate income tax.
Increase sales taxes by 4%.

Note that this doesn’t get rid of most of the compliance codes to which you object. Just those dealing with Georgia Income Tax.

Kirk

===
The result of the increases that will immediately affect me and the people I know are:
1 – 8 percent sales tax for the state.
2 – county and locals can push the sales tax to 16% – 17% in some cases. One of the BIG additions they’re allowed to put in without too many restrictions is a 6 (some cases 7) percent tax for trade centers/convention centers/coliseums.

This means that Catoosa county – my residence – will go from its present 7% to 11%. The current sales tax in Chattanooga – Hamilton County – is 9.25%. The people in Tennessee who make the short drive to Fort Oglethorpe (and Ringgold, and Rossville in Walker county) to save the 2.25% will stop doing so. And a number of shoppers will go the other direction. I suspect the net effect will be to reduce the total revenues for Catoosa county.

Is there going to be a huge difference for $1.75 saved per hundred dollars spent? no. Will there be some difference? Yes.

Second objection.

The 2007 Georgia budget projects that 31.8% of revenues will come from sales taxes and 48.3 from income taxes (4.4% corporate, 43.9% individual). A flat change gives us a budget reduction of 16.5%. Given how tightly we’ve already cut government due to the income shortfalls of the past few years, can we really afford to cut that much? Will taxpayer happiness at keeping ~2-3% more take-home pay outweigh the loss of services plus the ~4% increase in cost of goods and services?

Kirk

Furthermore, Business expansion also generates more for revenue for the state in purchases made by the state.

Again I have not read this proposal, probaly will not until this weekend, but as a former small business owner, compliance costs were outrageous and complicated.

There are better alternatives to the current system. If you have one better than the Fair Tax, lets hear it.

Your assertion that a rich fat cat will just hoard the money like a scrooge is not accurate. If a wealthy person buys a $1 million boat because he is making more money, then money goes to the boat builder and his employees.

You gotta love a free-market economy.

Basically, it’s an application of the supply and demand curve. The customers don’t see the internal expenses. They just see the total price, and that is what cues their demand.

Kirk

I have grave doubts whether there would be a reduction of prices under a fair tax.

So businesses quit paying. The rich pay less. But the end result is supposed to be income neutral. Which means the poor and middle class pick up what the rich and businesses quit paying.

Businesses see taxes as a cost of doing business. These costs factor into what that business charges for its goods and services forcing them to charge more. So who picks up the tab? Its the consumer not the business.

Reducing the cost of doing business is good for everyone.

The $26B of Tennessee is TOTAL appropriations/expenditures.
The $18.5B of Georgia is STATE appropriations for expenditure.

Either Tennessee should be considered at ~$11.5B OR Georgia should be considered at ~$34.4B. That’s the effect of including (or not including) Federal and Other funds from each budget.

So it’s either TN at $11.5 vs GA at ~$18.5, or it’s TN at ~$26B vs GA at ~$34.4B.

By the way, that’s using the official budgets for this year of both states. Page 39 in the TN budget, page 29 in the GA budget.

Kirk