“If these

Touche.

I haven’t spent much time thinking this through, but if the real problem is with property taxes and a sales tax that does not extend to all services, can the state pass legislation outlawing property taxes, forcing localities to tax at the consumption level instead? I would think that this one legislation would require localities to both increase consumption tax rates and broaden their tax base to raise sufficient revenue, having the end result of both eliminating property taxes and extending consumption tax to all goods and services. I know it sounds less sexy than the Great Tax Plan, but it might be more effective. If FL and other states can eliminate income tax, why don’t we just eliminate property tax?

Of the premises I listed above, #3 (provide equal services among unequal districts) contradicts #2 & 7 (cut taxes, give money back to the people).

There is no way that you will be increasing funding in areas with lower property tax digests to increase their spending to that of high tax digest areas while cutting taxes. The only way to equalize services would be to cut spending in high digest areas, or force these areas to raise their local sales taxes even higher to compensate for their reduced allotment.

Then there’s the argument of guaranteed funding at existing levels. What if, instead of picking today’s date, we used the funding levels of 1957 and adjusted for inflation. I use this example because it could well be 50 years before another tax “reform” is tried again. How does this plan adjust for growth patterns (which will certainly happen after the economic boom that is expected)? Again, the state, over time, will gradually control more and more of local affairs if this bill passes.

Are you in accounting?

I too am concerned with giving the state so much power. However, I vigorously support eliminating property taxes in favor of a service tax. I am in the service industry, and will be for the rest of my life, so this will directly effect me. We are a service economy, and land owners and manufacturers of tangible goods should not bear the tax burden.

Dorian,

How can rural Georgia be opposed to this bill? I understand the concern over local control. However, rural Georgians are the largest land owners in the state. This new tax structure would shift the tax burden away from rural Georgians toward Atlanta and its service industry.

Money is power. My concern is the politics that will inevitably be played with the money. As long as there are safeguards to ensure that some locality does not get screwed out of their money because of their political orientation, which Rep. Ehrhart says there is (guaranteeing they will receive at minimum their current level of funding), then this might be a good plan.

Rep. Ehrhart,

How much bureaucracy will this add to the state level? Will a new department be created to handle this?

Icarus….from my perspective and I feel it is also the Speakers; of your premises all are good EXCEPT number 5, and the first part of 4 which keeps existing spending levels. If you mean at the state level I am more interested in drawing down spending. At the local level it is not my business as a state legislator to tell them how to spend the taxpayers money. As a taxpayer though I would hope they would accept the same premise.

One problem, as I see it, with selecting a designated point in time to establish the allocation formula for the local revenue guarantee, is that there are pretty dramatic swings between different months of the year. During December, the share of sales taxes collected in counties with retail establishments is much greater than in the summer, so wouldn’t this be something to consider?

I really think you are onto something in eliminating most of the exemptions, for there are too many of narrow focus earmarked for just a few businesses.

I suggest that the General Assembly slash the exemptions and concentrate on enforcement of existing sales and use taxes – something that has not received due resources during my experience – for a couple of years before becoming totally dependent upon sales tax.

There is no question that abruptly killing the property tax is POPULAR, but is it prudent, given the known unknowns?

I don’t know what models and forecasting tools you are using, but the Wall Street Quants, geniuses from the best business schools in the country, and the financial captains of the US seem to be having apocalyptic disasters erupting from theirs these days.

I feel like I just fell down a rabbit hole and I’m talking to Alice and the Mad Hatter…

Welcome back Indy, please continue to treat Rep. Ehrhart with respect. At least he’s willing to ask the right questions.

chill,

Not MY premises.

I’m asking what are the premises being used to promote this plan. Once I know what they are, It will make it easier to have an “apples to apples” discussion.

You are right. Can you imagine the business we will do if ALL state and local revenues are wound up in a SALES TAX AND AN INCOME TAX?

The Georgia DOR will quite naturally expand, as the Georgia sales tax expands to services and becomes the preeminent source of revenue. Their audits will grow in scope, intrusiveness, and in number. They will use their broad powers to do use tax audits on individuals.

Service businesses that only filed and paid property taxes once a year, will find themselves having to file their new sales taxes monthly. They will have to make prepayments of estimated sales taxes as goods retailers must now.

We will find the loopholes that accentuate our value to clients.

Imagine how busy and lucrative it will be when the federal “Fair”????? tax is passed, with its blanket exemption of business and it causes myriad conflicts with the GREAT plan.

Imagine the heat that will come down when revenues run short and the counties questioon whether DOR is failing to account for, and disburse the funds accurately, as happened in the 90’s. At some point the locals will insist upon rights to audit DOR.

Seriously, the RIGHT TO AUDIT DOR on the part of the counties should be an ironclad precondition for moving to a broader and GREATer sales tax.

As it stands, the accuracy and dependablity of sales tax collections RIGHT NOW is not all that great. For example, I went to a home improvement store in the city and bought several thosand $ of goods to be delivered to a rural county. The retailer’s system had no code for the county of delivery and allocated the sales tax to Richmond County.

A client of mine had not one, BUT TWO MANUFACTURING PLANTS allocating sales tax distributions to the county in which the nearest large city was located, NOT the counties in which the plants were sited.

Of course, by allocating upon a point of time and on a revenue guarantee based upon the previous bad allocations guarantees future misallocations.

I suppose that this discussion will produce at least the positives of exposing ways in which the existing systems can be improved.

I had largely retired from tax accounting endeavors, but I see a lot of room for a second career as a tax reformer.

Actually it might be worth it to be rid of the awful property tax, which is riddled with corrupting exemptions that are causing a near revolt among homeowners.

If not, perhaps these discussions will result in reforms of BOTH sales and property tax. Both systems are loaded with too many exemptions and quirky inconsistencies.

I applaud the discussion, like the idea in general, but have doubts as to details.

Grand attempts toward change have merit, even when they fail.

If I’m not mistaken, counties are currently limited to a 1% sales tax for general purposes. An additional 1% is allowed for either schools and/or transportation, for specific projects. The law (constitution?) would have to be changed to allow local governments to increase taxes for “general purposes” above 1%, which almost all counties already charge.

I’m going to take a step back here and ask what are the goals of this tax reform? I’m guessing it can be more than one answer.

1. Eliminate the property tax, because it is unfair.

2. Cut taxes

3. Provide equal services (i.e. education spending) among unequal districts.

4. Maintain current spending levels under a more fair or simple system.

5. Consolidation of power at the state level.

6. Boost economic development.

7. Give money back to the people.

I seriously don’t mean this as a snark or a rhetorical question. I think it would be a lot easier for me to either express my skepticism or figure out why I should be supporting this (trying to keep an open mind, but will admit that my support is still doubtful – will try though) if I understand what the goals are other than to say we had tax “reform”.

So, in short, (too late), what do we hope to accomplish with this reform?

Well Dorian I guess I just have a different perspective of the 80 % of Georgians who have expressed concerns with property tax. I just fail to find them without the capacity to make such a decision.

When they are presented with the facts and not the concerns of those who like big taxes and more taxes, then I trust the people to make a sound judgement. I am not suggesting that you are a tax and spend individual either. Many local governments are out of control on tax though.

Oh and by the way where did I say “running amok” I think school boards by and large do a great job for the record. I just dont like property taxes as they are offensive and wrong.

Just a question to pose. How many local governments are in the process of limiting themselves and doing away with or cutting taxes?

I would suggest that state government is leading the way on this.
Please dont talk about those who claim millage reductions while the property tax assesments are going through the roof as a tax cut. This is truly the con of the century and if the state government did such we would be vilified worse than today.

I trust my local commissioners, and my local school board alot more than you gentlemen under the gold dome. My vote counts for more with them than it does with my state rep, and significantly more than with my senator. Moreover, most of my neighbors are people I know who are similarly situated as I am. All this is to say I have more direct representation. Those statements of yours about school boards running amok just doesn’t fly. My school board is much more accountable to me than you are, or for that matter, my representative.

I am not defending property taxes. Not at all, but while I do not like them, I believe in small government and local control more than I believe you guys deserve to consolidate power. As this discussion has indicated, it is an opinion that many share, and one that you cannot casually brush away. You guys don’t ever give power back. You just take it. I don’t intend that as a specific criticism toward you specifically, or the state government collectively. It is just the nature of governments, and it is something that, fundamentally and absolutely, is worth fighting against.

“Taking the almost 80% of their budget which comes from the state”

The money doesn’t come from the state. It comes from individual taxpayers. It is not a gift of charity that you guys are passing on to local governments. I know you feel the same way when you talk about unfunded federal mandates. I think you’re going to be very surprised when you see how many people that you normally agree with feel very strongly different on this issue.