CENTRALIZED GOVERNMENT: THERE GO THOSE STATE COMMIES!

I have just recieved the data on a centralized program of state taxation which is a poster child for the argument so many of you have been making about local control. This is the list of the dollars taxed to insurance companies, (which of course are just passed on directly to consumers), that is directly collected by that centrlized state government in Atlanta. It is then disbursed to all the cities and counties listed by formula which is set in statute.

In the interest of debate; I want to pose the rhetorical question:

Should the state immediatly discontinue this centralized taxation and disbursement scheme, thereby returning this tax money to the consumers who are paying it in their premiums? How can we trust that state government to actually do what is required in the statute?

It would seem to me that all of those with the local control issue as a guiding principle would agree that we should at once get rid of this tax and centralized disbursement scheme.

Could this be characterized as a HIDDEN TAX?

Premium tax

48 comments

  1. eehrhart says:

    I wonder if the local elected officials would agree Grift? Especially those most vociferous with respect to local control.
    You really gotta love the Irony!

    And the 287 million worth of hidden tax!

  2. John Konop says:

    In all due respect voters are very skeptical of both Parties on spending. And we have good reason not to trust our lawmakers. This is just one example of many! Can you see why our trust level is low?

    House GOP Help Dems Keep Pork

    TH-A majority of House Republicans crossed party lines to help Democrats override President Bush

  3. dorian says:

    Rep. Ehrhart, it is a broken paradigm. Saying that, because the state government disperses some money at the state level it ought to disperse all money at the state level, is like saying because I pay some of my income in taxes I ought to pay all my income in taxes. Even conceding the point, that you do this right, is still not persuasive. Do you invest your entire portfolio only in stocks, and only in one company? Would you consider letting the IRS collect taxes for the GA Dept of Revenue and let them tell you how much they think georgians ought to be taxed, and of that how much the state should get? After all, they do a good job of giving you money for roads…surely they could be trusted with that.

  4. Bill Simon says:

    Earl,

    I’m rather impressed with your digging and presentation. Thank you for showing a side of you NOT tinged with arrogance. 🙂

    And, thank you for bringing the information to light.

  5. eehrhart says:

    Dorian,

    I would say that is is an absolutely consisten paradigm with respect to the premium tax. It is hidden, it is disbursed by formula, and it is centralized in Atlanta.

    What you are positing is apples and oranges, but you are a pretty good lawyer and it sounds good.

    The squirm factor here for locals is that it is directly on point.

    Im not sure how in your example the Ga Dept of revenue does a good job with roads? This is news to me.

    I am just suggesting that someone may consider repealing this tax rhetorically

  6. Jace Walden says:

    Should the state immediatly discontinue this centralized taxation and disbursement scheme, thereby returning this tax money to the consumers who are paying it in their premiums?

    Yes.

    Could this be characterized as a HIDDEN TAX?

    Absolutely.

    Why not do all taxes at the local level and then let the locals decide how much is appropriate to give back to the state?

  7. eehrhart says:

    Bill,

    Your welcome!

    I think this is just the tip of the iceberg in such hidden tax and I am looking forward to finding more. This was just the first one that jumped out.

  8. griftdrift says:

    Rep. Erhart, another tact you might try is sales tax. Isn’t that also collected by the state and then redistributed? I believe part of the reasoning is the locals don’t have the infrastructure to adequately make the collections.

    Anyway, I’m more concerned about hidden spending. Let’s start with a discussion of naming roads and customized license plates.

  9. eehrhart says:

    Jace,

    You have no idea how great the temptation is to do just what you ask.

    In falls in the category of ” be careful what you ask for you just might get it” with respect to some in local government!

  10. eehrhart says:

    Grift,

    I agree and sales tax is a relevant example especially when collected as splost.

    With respect to hidden spending; I am hopeful that the forensic accounting done during our new zero based budgeting process will uncover lots of spending programs that can no longer stand up to todays priorities.

    We can then CUT that spending!

    Never in 20 years have I named a road and I feel almost the same about the plates.

  11. eehrhart says:

    Grift,

    I count that as twice now you have agreed with me.

    YOU better check your premises or that FLACK guy is really gonna be on your case!

    Yes January is a long way down the road.

  12. John Konop says:

    If you agree or not with Rep. Erhart, we should give him a tremendous amount of respect for him having this open dialogue! I do think he has demonstrated knowledge about the issue and has brought up some very interesting points.

    I do think the tax revenue should be controlled on a local level and each area gets back what they collect. This does not guarantee success but at least the local officials are accountable.

  13. LoyaltyIsMyHonor says:

    Earl, I know that this isn’t an original idea, but have you looked at eliminating the income tax outright and then increasing the sales tax to even it out..or, more importantly, abolishing most of the special interest sales tax abatements and exemptions?

    I think most of us would be more receptive to that idea.

  14. debbie0040 says:

    Can a cap be added to limit the growth of local governments or at least tie the growth to inflation?

    John, do you know that with the property tax some counties give part of their share to the state and the state re-distributes that to other counties? So some counties are not getting back what they collect now.

    I am disgusted about the veto override…

  15. Earl,

    Right now I choose what county to live in and the counties offer different services and tax me at different levels. According to your logic, shouldn’t we just get rid of the counties altogether (and their school boards) and have one consistent level of services across the board?

    Well?

  16. Still Looking says:

    Dear Representative,

    The fact is I know my local government, and I can exert more control over them than I can the General Assembly. I vote for 2 out of the 7 county commissioners that represent my county. That means I have direct say in almost 30% of my local governments legislative body. Compare that to my representation in the legislature. Even though I don

  17. dorian says:

    Thank you, Rep. Ehrhart. Not all my analogies are gems. But, if I could rhyme like Johnnie Cochran, your tax scheme would be in big trouble.

  18. heroV says:

    Would churches/mosques/temples/etc. pay taxes under the GREAT plan for all of their expenditures? If so that would be awesome.

  19. jsm says:

    Take away property and ad valorem taxes, and the county tax commissioner can collect local sales tax in that office.

  20. dorian says:

    Still Looking, you hit on the fundamental disconnect between the gold dome and your home. Federalism doesn’t end in Atlanta. It ends in the communities we live in.

    On the surface, this seems like a debate over taxes and which is better,but even amongst those of us who oppose the GREAT tax, we disagree on what alternative is better. Deeper down, for me anyway, this is about power and control and who should have it.

    Putting rhetoric aside, the state government has it’s place. No one is suggesting we abolish it. It just needs to be kept in check. That is not the legislatures job. It is ours.

    It is axiomatic that once people have power they are rather reluctant to give it up. Giving Atlanta the power to lord over every local economy is not something we’d ever get back. Kinda makes you wonder what the next step would be?

  21. debbie0040 says:

    Someone suggested that the local tax commissioner’s office collect the taxes and send it to the state.

    If local control is the fundamental disgreement for those that oppose the plan, shouldn’t a compromise be attempted? Both sides should be willing to give and take in order to achieve a solution that is amicable. It would be better than the tax structure in place now.

    I do think that caps to control local government should be part of the solution. Once the government has your money, they will find a way to spend it….

  22. eburke says:

    Jmac,
    That makes sense. Give the local voters the option of how they want to finance the operation of their local governments. Some may elect to continue with the property tax and some may want to use sales tax and then give us the option to use a combination of the two as we deem appropriate within our county.

    Also, why hasn’t the General Assembly eliminated the .25 mil property tax that it does have control over?

  23. dorian says:

    Jmac, the problem with that is this. Let’s say you have two counties side by side, x & y. X has no property taxes, but has the extra sales tax. Y has property taxes, but not the extra sales taxes. What do you think is going to happen? People will live in X and work and shop in Y. Moreover, businesses will leave X in droves, since business to business transactions are taxed, and it will be cheaper to do business elsewhere. Also, property values will skyrocket in X because a) it isn’t taxed and b) demand will go up. People will want to own land where there is no tax on that land. This will likely have several effects. 1) People who live in X will sell out, cash in, and move somewhere else. 2) The increased price of the land will be passed on to renters and other consumers making it cost even more to live in X all around.

    This is just a simplified explanation, but a larger version of this scenario will play out with the state economy if this tax scheme passes.

  24. John Konop says:

    Debbie

    “John, do you know that with the property tax some counties give part of their share to the state and the state re-distributes that to other counties”?

    I agree this wrong it kills the incentive to clean up your own county.

  25. eehrhart says:

    eburke,

    The .25 is eliminated in the bill.

    Dorian,

    Neither are my analogies gems. However your reference to Johnny Cochran and the glove thing has me nervous.

    Loyalty,
    We did actually look at that and we decided on this course. That is of course an option when the plan succeeds as well as I think it will.

  26. Still Looking says:

    What is one of the fundamental rules of personal financial success? Diversify your sources of income and diversify your assetts. If your income is dependent on one source or one sector of clients and if that sector turns down, your income is going to plummet. If all of your stocks are with retailers and Christmas shopping falls, your retirement assetts lost value. The point is: have a diversifed portfolio and diverse sources of income.

    The same business principle applies to government. It is foolish to peg the vast majority of your revenue sources to one revenue source.

    If you want to control taxes, set a goal and reduce spending accordingly.

  27. jillchambers says:

    The Legislature cannot cut spending until we are allowed to examine the expenditures of state agencies, authorities, and boards.

    Zero based budgeting, full disclosure, along with open meetings and records are the only path to true fiscal responsibility.

    “The liberties of the people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them.” – Patrick Henry

  28. dorian says:

    It does happen now, but it doesn’t include services or business to business transactions. Anyway, those were just economic issues. I more or less agree with you conceptually. I don’t have the answer myself.

  29. Jace Walden says:

    Earl,

    It seems that when anyone, be it state, local, or federal government wants to do anything regarding taxes, they always pitch it as “revnue neutral”.

    What is the big deal with something being “revenue neutral”? Isn’t this just a fancy way of saying “spend just as much, tax just as much…just differently”?

    Shouldn’t a Republican controlled legislature be more concerned with actually cutting taxes, creating less revenue and cutting spending?

  30. LoyaltyIsMyHonor says:

    Jace,
    Um…that would require too much common sense. Even the holiest Republican, Ronald Reagan, couldn’t achieve that. The whole notion that Republicans are tax/spend cutters is the biggest trick they’ve ever pulled on the voters. One only has to look at our own General Assembly to figure that out.

  31. dorian says:

    Isn’t it ironic that the most fiscally conservative president we’ve had in the last twenty years was a democrat? Bill Clinton. Say what you will about his personal life, but the man paid down the defecit.

  32. Bill Simon says:

    Dorian,

    Were you in the turnip fields during the 1990s? It was the GOP Congress that pushed Clinton through several doors he would NOT have gone through voluntarily.

  33. John Konop says:

    Bill,

    I did not vote for Clinton, yet I would say the tension of having a split government lowered spending. One Party rule has not worked well. The only reason some bills are being trimmed back is because we have tension between the House and Bush.

    If I am wrong why did Bush only now start using the veto on spending bills? Also the bleed rate of debt has gotten better.

    I know both Democrats and Republican will get upset with this post. But as a businessman the numbers are the numbers!

  34. dorian says:

    No, Bill I was in high school actually. I was relying on Alan Greenspan for those observations, but I am sure you know much more about it than he does.

  35. LoyaltyIsMyHonor says:

    “Were you in the turnip fields during the 1990s? It was the GOP Congress that pushed Clinton through several doors he would NOT have gone through voluntarily.”

    Such a predictable response, straight from Republican talking points. Well there were many fiscal conservative doors that Bush and his neocon pals in congress did not voluntarily walk through.

  36. jm says:

    Is their a formula proposed in the bill? Will that formula designate a certain percentage for schools vs general county fees? Will some counties have excessive shortfalls based on these apportionments?

    Side note: DeKalb and Gwinnett have similar populations (2005 figures – I looked it up, around 700k for each). DeKalb obtained about $6 million more than Gwinnett. It seems they should be more even.

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