A GREAT Plan?

So Jason Pye just sent me a link to a powerpoint of the Speaker’s new tax plan. The powerpoint is a bit short on useful details, but it gives a general overview of the problem, and two proposed solutions.

I’ll accept the problem of too many taxing jurisdictions and the fact that property tax revenue growth exceeds personal income growth (meaning that property taxes take a bigger bite out of people’s budgets).

The Speaker’s plan will eliminate all taxes on property: real, inventory and vehicular. It will lower the income tax and sales taxes to 4%, but eliminate most of the exemptions and add services to what is taxes. So if you get your house painted, then expect an extra 4% of that bill to go to the state.

It borrows and idea from the FairTax and would offer a refundable credit to cover the extra sales taxes to filers who meet certain (undefined) criteria.

There is another plan that would do much the same but leave income taxes untouched.

9 comments

  1. jm says:

    So they plan to do more with less? Or just less with less? Garaunteed you will see all our neighbors start registering their vehicles in GA. This already happens in the NE where states are close together. Whever you get the cheapest deal (up there it’s usually insurance that tips the scale) that’s where you register your vehicle.

  2. Common Sense says:

    It’s about time someone came up with a plan to get those freeloading “food eaters” off that grocery tax exemption.

    Speaker Richardson has the courage to convert thier free lunches in free plantations for the rest of us.

  3. What’s so bad about having local people vote on local representatives to set their tax rates, instead of Glenn setting them for all of us?

    If this meaningless powerpoint is any indication of the type of leadership we have at the state capital, I don’t think I want him in charge of figuring out what the rate is.

  4. Harry says:

    He says, “leave income tax reform for another day”? Can’t agree with that. We need to start cutting or eliminating income tax rates in order to attract lucerative corporations and high-income individuals back into this state. We’re not competitive with our income tax rates.

  5. jsm says:

    “Garaunteed you will see all our neighbors start registering their vehicles in GA.”

    So What? I support removing tax on property. Owning something should not be a basis for having to pay to operate government. Income should be the basis for tax, or at least a factor.

  6. Briardawg says:

    Check out SR282. Its the Senate plan for tax reform: the Georgia One Tax. It eliminates the income tax and state sales tax exemptions. The sales tax is expanded to include services and rate would be capped at around 6%. The Georgia One Tax does apply to local governments.

  7. IndyInjun says:

    There is a LOT of pressure around property tax rates because they are rising faster than incomes as the Speaker noted.

    I like the idea of doing away with the property tax, but have a TON of questions about the direction the House is taking us.

    House Resolution 900 was introduced by Richardson and Fleming. It called for a 5.75% VALUE ADDED TAX ‘on business’ and keeping the INDIVIDUAL income tax, also at 5.75%. They since have retreated in favor of this “GREAT???? Plan”

    The problem with a VAT or sales tax on final point of delivery in Georgia with NO EXEMPTIONS is that manufactured products for export or further manufacturing are taxed. (the sketchy points on the PP seem to indicate that this philosophy is being kept.)

    Another issue is whether the reciprocity of other states with SALES tax would be sustainable with a VAT. Calling it a sales tax, then applying to the final stage of production in Georgia would likely cause retaliation.

    Another problem is that GENERAL OBLIGATION bonds are secured by the taxing authority of the state and locals against property. This evaporates with a sales tax and would cause borrowing costs to increase, particularly since the state income tax exemption for interest on such bonds goes away too.

    A populist might have a big problem with exempting business to business sales taxes, for just the sales taxes on electricity for a large manufacturer now run into the millions of dollars. These costs would go directly onto the backs of Georgia Consumers, instead of being exported in the cost of goods.

    HR 900 was politically DOA for the reason that IT eliminated local option taxation (the ‘Great????’ tax plan seems also aimed at eliminating all of the various tax jurisdictions) and threw all the funds into a ‘local revenue guarantee” to be CONTROLLED IN ATLANTA. Funds disbursed to the counties and cities were to be on their pro-rata share of state revenues in a base-line year of 2006. Counties with accelerated growth would have been severely punished.

    The devil is in the details and the devil was being quickly exposed with HRes900, hence the sketchy plans now being floated.

    Last quarter income taxes were way up, while sales tax collections were down – or at least those were the headlines. This would not bode well for transfer onto a sales tax.

    The Georgia DOR will be hiring heavily and soon the income and sales tax on services will be causing intrusive audits just like with the IRS.

    The public must ask whether they really WANT a more corrosive tax in terms of inflation growth versus income growth than the property tax. Such will be any sales tax. You see, the doubling of the money supply has created a great inflation, that is being more manifest every day, exploding at rates much faster than income. Food….energy….medical costs….DOCTOR FEES…all these things are necessities that will be taxed to individuals BUT NOT BUSINESS.

    The OTHER STATES reliant upon a sales tax TAX BUSINESS HEAVILY along with individuals and the one most often cited, Florida, collects taxes on tourists.

    All this is about is CHANGING THE SUBJECT that the GOP’s elephantine spending at the state and local levels has vastly outstripped the rate of income growth of its citizens.

    Now these same folks preach tax relief.

    Its like an arsonist-turned- fire chief wanting to redistribute the fire hydrants to protect business while everyone else’s finances go up in flames from the fires he set.

    Frankly, the states that rely on a sales tax are finding themselves short of revenue and are passing NEW gross receipts taxes on business to make up the difference.

    WHAT makes Georgia exempt (wicked pun there….) from the lessons learned elsewhere?

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