Get Rid of Them All

Industries are defending their tax exemptions.

A handful of area industries defended their state tax exemptions and warned against tax hikes during the second fact-finding session of the Special Council on Tax Reform and Fairness, held Monday in Augusta.

Get rid of them all and lower the overall rate. Prices will certainly go up, but we should get out of the game of hiring short skirted lobbyists with big boobs to get tax breaks for preferred industries — that’s exactly what happens in Georgia.

28 comments

  1. This is why the bill creating the Special Council will receive an up or down vote only. Everybody wants to protect their tax exemption.

    I agree Erick, let’s get rid of them all, either by shifting toward a sales tax based system or taxing everything and keeping the tax low.

    BTW, there will be other “fact finding sessions” where the public can give input.

    There are also a number of meetings by the Special Council that the public can attend.

    I plan on attending as many of the Special Council meetings that I can.

    • John Konop says:

      Buzz,

      A single digit sales tax on a state level would work well if we cut out the exemptions and got rid of state income tax. But if you add the Fair tax it would be a tax revenue nightmare with a rate between 42 to 50 cents on a dollar.

      1) Kill the re-state values for new homes and loans for pre-existing sales
      2) Tax collection nightmare at that high of a rate with defaults
      3) Destroy spending on retires with that rate
      4) Big ticket sales would be made overseas with that type of savings and kill jobs
      5) Healthcare cost would skyrocket

    • John Konop says:

      This article from Harry sums up the problem well.

      ……Favored businesses (and by these we are talking about the top 20 to 30 largest banks and corporations in a particular country) get protection from competition, both upstart domestic entrepreneurs as well as any foreign rivals. In return, they provide monetary and political support for politicians’ pet projects–from recycling to windmills–with the understanding that politicians will give them legislative back doors to recover the costs of these programs from customers or taxpayers. In return for granting this largess to selected corporations and unions, government officials get to remain in power. Typically this arrangement appeals to parties on both the left and the right, such that the nominal ruling party may change but the core group in power remain the same…….

  2. What?!?!

    You would take away Washington’s ability to screw taxpayers out of their money to prop up “chosen” industries?

    Next you’ll be for lowering barriers of entry and making industries and individual businesses become more efficient or close. Is that wise?????

  3. hannah says:

    Private corporations see themselves in a contest with public corporations. This is a bit strange, since it is the public corporation which authorizes the creation of the private one.
    Nevertheless, private corporations have taken to heart the dictum and rationale establishments of religion cling to — that “the power to tax is the power to destroy” –and resist the prospect of taxation as if their existence depended on avoiding that trap.
    In fact, destruction would be totally counter-productive since it would leave the tax man with nothing to tap the next time around. The tax man has every incentive to insure that a similar amount can be collected next year.
    However, private corporations do have reason to worry. The public corporations which create them may well decide they’ve outlived their purpose and decide to dissolve the non-performing and recognize the charters of alternative groups.
    The Koch brothers may feel really clever about having corralled the animosities of the Tea Party people, but the worm is sure to turn when the denizens of the heartland discover they’ve been suckered by the corporations once again.

    • AubieTurtle says:

      “In fact, destruction would be totally counter-productive since it would leave the tax man with nothing to tap the next time around. The tax man has every incentive to insure that a similar amount can be collected next year.”

      Tell that to the Dodo.

      While it would be smart to keep a revenue source in good enough condition that it could continue to produce revenue to be taxed, that doesn’t mean that someone wouldn’t tax it out of existence in order to receive a short term gain. Human activity is full of examples of choices that are bad in the long term but are made anyway because of the short term gain.

  4. Dave Bearse says:

    I’ll grant that the recommendations of the Council are likely to include revenue enhancements, but eliminating exemptions can also be revenue neutral, hence no overall net increase in prices.

    I’m looking forward to inclusion of at least some services and a significant rate cut.

    I’m of the opinion is that there is significant “leakage” associated with exemptions, i.e. taxes that are due but aren’t paid, either by intent, wilful indifference, or honest mistake. Given human nature, even a very honest person is generally more likely to underpay than overpay.

    There are also administrative savings to be had in eliminating exemptions accounting, documentation and government bureaucracy. It’s unquestionable, especially in the case of sales taxes, for a business to calculate, then the state check or audit, that a percentage of the gross was paid, rather than gross less a multitude of various exemptions to a multitude of various entities.

    I think it ridiculous the General Assembly exempts a museum or non-profit from sales taxes on building materials used for facilities construction as they’ve done in the past. If a state contribution is in order, don’t junk up the tax code, make an equivalent appropriation. It’s more transparent.

  5. MSBassSinger says:

    Are there any real fiscal conservatives on here?

    No, Erick – the answer is not removing corporate tax exemptions. The answer is removing all business taxes.

    No business pays tax. Taxes are simply integrated into the cost of goods or services sold (COGS) as part of overhead, and passed on to the consumer.

    Business taxes are a class-warfare con job perpetuated by liberals (Democrats and Rockefeller Republicans) to make people think “yeah, stick to those evil businesses” when in reality it is those same consumers who are being taxed. Like all good liberals, they count on the voters’ ignorance.

    I do agree that for personal taxes, removing exemptions and having a flat rate for everyone’s income is a big step forward.

      • MSBassSinger says:

        I am not against a consumption-only tax. In fact, I think, in theory, it is the best choice. However, implementing a flat rate consumption tax that is coupled with elimination of income tax, and minimizing the impact during transition, though possible, would take some serious work and require that political party interests and special interests be kept out of the design and implementation. That is a tall order, especially as gullible as many voters are when they go into a trance upon hearing the mantra “But its for the children.” Or “environment”. Or “my mortgage deduction”, or whatever phony excuse the piglets at the government sow’s teat come up with.

        I figure that no one wins if we argue interminably about how to create a tax code the best way. Let’s take the steps we can. The first step for the right foot is a flat, non-progressive, no exemption, income tax replacing the current income tax scheme, and the first step for the left foot is to eliminate all spending that is not authorized by the Constitution. That, IMHO, applies to both State and Federal governments. Some spending may need to be wound down over a year or two, much can be terminated in the next fiscal year. But either way, it goes away while the piglets grouse.

        Here are some numbers (FY 2009) that show how a flat rate income tax can work in both Federal and State:
        Personal Income
        US 2009 $12,015,534,968,000
        GA 2009 $332,091,131,000 (2.76% of US)

        Budgets
        US $3,100,000,000,000 (25% of US Personal Income)
        GA $18,903,699,531 (5.7% of GA Personal income)
        http://www.google.com/publicdata/explore?ds=a7jenngfc4um7_&ctype=l&strail=false&nselm=h&met_y=personal_income&hl=en&dl=en
        http://www.opb.state.ga.us/media/11687/budget%20in%20brief%20-%20afy%202009-fy%202010.pdf

        Thus, with a flat federal tax rate of 25% and a flat state tax rate of 6%, the budget deficits are eliminated, and business taxes go away.

        The only people who will not like that are 1) the freeloaders who don’t pay taxes now, and 2) the people who make money of the freeloaders not paying taxes.

        • Looks reasonable to me. I thought Georgia had recently shrunk it’s budget to around the $17B mark though, no? (Not saying that’s reasonable… I think there’s still more shrinkage that could occur…)

          • MSBassSinger says:

            I believe you are right, but I used an earlier FY2009 figure just to be fair. I read in one place where the actual FY2009 expenditures are ~$30 billion, but the difference between that and the budget is made up by federal money.

            I have yet to see the a legislator or Governor (or Gubernatorial candidate) who is willing to make it simple by saying “In FY2009, we took in $X from Georgia taxes, $X from the feds, and spent $X on state items, plus $X on federally mandated items.”

            Doesn’t that seem like something a real conservative would do? I wish Deal would. When I went to http://www.nathandeal.org/index.php, you could almost hear the crickets it is so dead there. Is Deal still running for Governor?

        • polisavvy says:

          I hope I don’t get blamed either. I did find your link interesting to say the least. 🙂 By the way, what does MS stand for in your name? Just curious.

              • MSBassSinger says:

                No, I think I was inoculated for that a while back. 🙂

                I know what I like, and what I can do that people don’t shoot at me for, so when the two things coincide with opportunity, I take advantage of it.

                When I grew up in rural south Georgia in the 50s, 60s, and 70s, we kids, even those of us from mean estate, were taught that part of becoming an adult was learning about a lot of different disciplines. Whether you were going to be a farmer, a ditch digger, or a nuclear scientist, you needed to know literature, math, science, music, art, history, etc. so you could understand the world around you. There was a social stigma attached to not being able to read and write well unless that was truly outside your mental capacity.

                • polisavvy says:

                  It also sounds like we are about the same age and were raised by similar parents. My parents also encouraged me to be very focused on literature, history, science, and music — they tried to encourage me with math; but, I’m the product of new math and never caught on.

                  • MSBassSinger says:

                    My Ohio-raised wife was like that. When she went to college in her 30s, I had to tutor her in algebra, and before too long, the light bulb came on. Math isn’t hard, but overcoming poor math education and/or educators in grade and high school is a bit harder.

                    • polisavvy says:

                      True. Back in the day, the teachers just taught from the book they had. Most of the teachers I had were all about ready for retirement so I doubt seriously that they were educated in the new math either. It’s like we all got to experience it for the first time together. I became completely lost. Regular math was never a problem — new math was an entirely different ballgame.

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