Which taxes to cut

When the House leaders started looking at which taxes to cut, or at least when the Speaker did, he initially, I’m told, looked at the income tax. Art Laffer, my tax hero and the man the Speaker wisely relied on, is a fan of cutting the income tax.

Instead, the House decided to cut the car tax. I have no bones to pick with that. I think it’s nuts to have a tax every birthday.

But the measure isn’t flying with the Senate. And the Senate has decided to one up the House by cutting income taxes.

The benefit of cutting the income tax is that it is more immediate in this economy and the money comes out of state funds, not local funds that the state then will have to promise to make up to the local governments.

So now we’re at the point of deciding which way to go, if we go one way or no way at all. And groups are starting to weigh in.

The National Taxpayers Union supports the Senate plan “as the preferred tax cut proposal.”

Americans for Tax Reform says, “In addition to providing the greatest relief, a cut in income tax is the most pro-growth option on the table.”

The libertarian Cato Institute says the Senate plan would “likely spur rising economic output.”

The Tax Foundation also prefers the Senate Plan.

Investors Business Daily, in an editorial, notes, “While Laffer has said killing the property tax will boost the state economy and give the housing market a lift, Georgia would be better off cutting income taxes as the Senate proposes. Laffer himself has made the case for decades that reducing the income tax burden has several salutary effects.”

If those weren’t enough to give weight to the Senate plan as the superior choice for tax reform, the ACCG and GMA have now weighed in with letters. The ACCG writes, “the Senate Substitute to HR 1246 provides significant tax relief to Georgia’s citizens without creating service delivery problems at the local level.”

The GMA writes, “The phased-in income tax cut proposal addresses state tax reform using state taxes, not local taxes.”

So now the House and Senate must decide if it is more important to get rid of the car tax or deliver a tax cut. Because the one will be heavily opposed. The other, probably not.

On the weight of the free market groups, I think we might ought to go with the Senate plan. Don’t get me wrong, I’d love to do away with the car tax. But I’d much prefer a meaningful economic stimulus, which is what the Senate plan offers.

4 comments

  1. Carpe Forem says:

    Sorry about blurting out. Now that I’ve read past the title, I have to agree. I hate being taxed on my birthday and on MY property, it’s like you never own anything. But I hate being taxed on my labor more. I don’t consider it income, it’s a trade, a period of my life using skills that I made the effort to develop for money.
    Therefore, I must stick with my original answer, both. Cut whatever spending you need to to accommodate.

  2. Dave Bearse says:

    You said it yourself…

    “The benefit of cutting the income tax is that it is more immediate in this economy and the money comes out of state funds, not local funds that the state then will have to promise to make up to the local governments.”

    Cutting the motor vehicle ad valorem tax is the state meddling in local taxes to fund a few state jobs to administer it all.

  3. jsm says:

    If we keep the car tax, it should be the same for everyone across the board–not based on the assessed value of one’s vehicle.

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