Tax increase in the works?

While the House was getting all the attention yesterday, Casey Cagle was having a press conference on the budget crisis. Via the AJC:

Lt. Gov. Casey Cagle, in his first press conference of the session, announced the creation of task force comprised of state business leaders that would be charged with advising and making recommendations to the senate regarding, “short and long-term budget solutions.”

“We will face some of the most difficult budget decisions in over a decade in the coming session and the budget task force will be a valuable enhancement to the ongoing work of our budget experts and committee chairman,” Cagle said.

Does Cagle see the writing on the wall? That there will be no way to balance the budget while still paying off the vast number of special interest groups who will revolt if their hand-outs are cut any further. That the only “short or long-term solution” is a tax increase.

Problem is, tax increases during a recession and election year are political suicide. One solution is to try and pass the blame off to an outside group to give yourself political cover.

Looking at the make-up of this task force, it doesn’t seem like they’re gonna raise business taxes. either.


  1. Tireless says:

    Whenever I see the formation of a “blue ribbon” panel to solve a political problem, I start my stretching exercises…….I will appreciate the flexibility when I am forced to grab my ankles.

    Note to repub’s…….you have only one viable solution, CUT SPENDING like all of us have done during this economic meltdown. Raising taxes will do little more than tarnish the GA repub brand.

    • B Balz says:

      As previously stated, GA is one of the more efficiently run States. Sure there may be places to cut, but not without a lot of blowback.

  2. ByteMe says:

    One solution is to try and pass the blame off to an outside group to give yourself political cover.

    Choose one or more from:

    (1) The Federal government
    (2) Gays
    (3) “Sex offenders”

  3. I don’t think Kelly McCutchen would be supporting tax increases any time soon.

    But independent, small business doesn’t seem represented… agreed.

    I particularly hate the Occupation tax in which *GROSS* annual income of a business is taxed. (Again, that’s gross revenue — not net). But selected professions are exempted from paying taxes based on their gross receipts — attorneys for example. The favored professions, for no reason whatsoever other than political favoritism by the legislature, pay a smaller annual flat-fee of $400 a year — maximum.

    Small business does seem oddly not present on this committee. Perhaps it’s not a completed committee?

    • Provocateur says:

      True. Kelly likes “micro tax increases” like the ones levied on Ga Power customers through SB 31.

  4. Goldwater Conservative says:

    I doubt there will be many tax increases. I can see the repeal of a few tax cuts and credits, but I hardly see tax increases. Repealing a tax cut is not the same as raising taxes (I know…”Tell a voter that”).

    How many jobs will be lost if certain projects, critical or not, are not renewed for the next fiscal year? I am not certain, but I am certain that Cagle and the rest of the state legislators (not just the Republicans) know the precise number.

    I hate to say this, but nobody at the capital cares all that much about the budget…they only care about reelection. This session ought to be a brutal one.

    Somebody should start an open thread on ideas for a name for this session.

  5. BuckheadConservative says:

    The increased attention brought on by their ethical issues is going to bring extra attention to their policy issues, also. This session is going to be fun.

  6. Ken in Eastman says:

    For what it’s worth, my understanding is that tax increases are not even on the table – yet. Look for more cuts.

    The debate among the legislators is the direction of the economy over the next year and thereafter. Some believe we have hit bottom and expect revenues to be low for the next year or so and then begin a slow climb. Others believe the economy is moving sideways for a few months and will then resume its decline.

    I believe the direction of the economy depends on the amount of foolishness enacted in Washington. If we add the current health care burden, the cap and trade tax and additional “stimulus” funds then it’s going to be very bad.

    • ByteMe says:

      Did you catch the stats on housing permits here in Georgia? At its peak, it was 68,000 per year. If we somehow double the total housing starts from last year, we get to a paltry 12,000. So much of our economy and taxation was based on housing and construction. It’s going to take a while to get back there. Government’s going to need a new funding source.

      As for your comments about Washington, you definitely don’t understand business, which would LOVE to get health care off their books and onto the tax rolls instead and they are hoping for a clear indication that the USA is going to be serious about cutting carbon usage in favor of emerging energy markets. Not that they really care one way or the other about carbon usage… they just want the clear indication because that’s how you plan for the future. Uncertainty is the problem to them.

      • Ken in Eastman says:


        Happy New Year!

        OK, I think we’re still on our way down and are taking a short time-out. Even the reps think we are years away from regaining what we were just a couple of years ago, even if we’ve hit bottom.

        I agree uncertainty (increased risk) is the biggest killer of new jobs and biz expansion.

        Yes, business would like to get health care of its back; however, then it falls back on taxpayers who own the businesses and a hefty dose of Washington Bureaucracy and Restrictions tied to it.

        BTW, small business is going to get slaughtered with this stuff. I’ll let you explain to my small biz owner friends who carry a $10,000 annual deductible for health insurance and under Obamacare would be forced to lower their deductibles and increase their costs tremendously. It could well put them out of business.

        • ByteMe says:

          I own several small businesses and actually worry about the “cadillac plan tax”, just because I’m giving myself some seriously good benefits (and yet without that, my wife can’t get covered at all).

          Pretty sure if you look closely at the details in the bill, your small biz friends may not be so screwed. And carrying a $10K deductible if you also offer an HSA is a cost-effective way to go.

      • Mad Dog says:


        Housing permits are a very good indicator. So are the total dollars in new mortgage loan or loan originations.

        In 2000, long before Bush proposed creating an ownership society, originations were under $100 billion per year. Under the concept of an ownership society, the peak value of originations hit $1.6 trillion.

        Until we return to the year 2000 levels, we haven’t hit bottom.

        • B Balz says:

          I am hearing we’ll see housing starts UP 30-40%, but in absolute terms, that is very far below where we were.

          The question about the recovery centers around the only known threat –Whether or not the $1-2 Trillion in commercial real estate loans will be re-financed. If yes, then we’ll see several years of modest, positive GNP.

          If the commercial loan valuation crisis bleeds into the general economy, like the sub-prime mess did, we are looking at another dip.

          Some suggest going short on the market in 2010.

          Unlike Indy, I am steadfast that we will not implode into a grey, broken world.

          • ByteMe says:

            Recessions tend to have three plunges to freak people out and get them out of the market.

            So far, we’ve had two. 2010? Maybe, maybe not. But we’re definitely coming up on a high spot in the market for now.

            I also don’t have the dire view of Indy, just because there are people who made a killing shorting real estate in 2008. If you know where to look, there’s money to be made.

          • Mad Dog says:


            “The question about the recovery centers around the only known threat –Whether or not the $1-2 Trillion in commercial real estate loans will be re-financed. If yes, then we’ll see several years of modest, positive GNP.”

            I’m not sure I understand this. So my reply might just be ignorant.

            Why do these need to be refinanced?


          • ByteMe says:

            Some of it is construction loans and those get refinanced when the construction ends or when the covenants on the loan trigger (e.g., if construction takes too long).

            Some of it will need to refi just because the plan was to buy, develop, sell and no buyers right now, so the last part of the plan is #FAIL. For those in early stage development, step 2 is also likely #FAIL. So those loans will go bust and the bank(s) will own the property and look to dump it on any takers willing to come up with at least 60 cents on the dollar.

            That’s my understanding of it anyway. Some folks in the comm real estate market may have a better view of the difficulties.

          • B Balz says:

            Byte is essentially correct.

            The current ‘extend and pretend’ method where banks extend the term and pretend the asset equity still matches the loan ratios is used with some success. Not all lendors are able to E&P, so everyone is waiting.

          • Mad Dog says:

            Thanks B and B,

            I get a better idea of it now.

            So not every loan in commercial property ‘needs’ to refi. Just the ones that have some speculation or were put together for a short term purpose.

            I don’t think too many spec loans will get refi’d. And no non-performing loans will get new terms. At least that is MHO.


  7. IndyInjun says:

    Indy, doesn’t have a dire outlook – its a golden one.

    Gold and silver to the moon, just like since 2002, only faster and higher.

    This is a vote of confidence in your outlook for ‘growth’ fueled by B. Insane Obama’s infinite, one-legged $USD creation spreadsheet at the Fed.

  8. spencerman says:

    Collectivists , progressives, democrats, republicans, Marxists…they are all the same…if they tax us in addition to what is coming down from DC, you can bet your bippy that there will be revolt of some kind. I for see taxpayers withholding taxes so they can make ends meat and that will tell the state and feds that they will need a payment plan so taxpayers can catch up on the missed taxes they did not collect….when it rains it pours. Better yet, they cannot get blood($$$) out of a furloughed or unemployed turnip.

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