Tax Reform Lite Here Today, Passed Tomorrow

Today’s Courier Herald Column:

The legislature’s joint special committee on tax reform awoke from what had been an apparent slumber to produce a significantly scaled back tax reform package on Monday.  The bill passed the 180 member Georgia House on Tuesday with just 9 opposing votes.  Clearly, the committee was not asleep but was just oiling up.  A significant amount of grease is required to get a relatively controversial bill through the legislature with virtually no opposition.

The bill has winners and losers, and it being billed as an overall tax cut based on the fiscal note prepared to support the bill.  Over three years, the package is projected to produce a net $88 Million in savings for Georgia taxpayers in payments to the state.  This is accomplished by producing sales tax holidays in 2013 and 2014.  In year 2015, the bill is expected to collect more state revenue than it cuts.

The sales tax holiday was discussed around the capitol as the way to help Georgians accept the expanded collection of sales taxes on internet purchases, with legislators saying they were looking at making the sales tax holiday permanent.  “Permanent” for the cut means through 2014.  “Permanent” for internet sales tax collection means “forever”.

And, of course, there are large ornaments hung on this Christmas tree legislation by lobbyists and the well connected.  Chief among them is a new tag transfer fee of 7% of the purchase price that will be charged in place of sales tax every time a title is transferred in the state.  The holy grail of the car dealers’ lobby, this would apply not just to sales by licensed dealers but also to private auto sales between individuals.  

The bill would also eliminate ad valorem taxes paid on individual’s birthdays every year.  While a tax cut for consumers, it is also a large cut of revenue for local governments, growing to $150 Million per year in 2015.  Lawmakers promise the state will replace lost local revenue from the general fund.  Lawmakers also gutted a bill last week that would have ensured local governments received fee revenue collected by the state intended for them but held for other uses in the general fund.  Any local government relying on this promise for future revenue needs a history lesson in how the Georgia appropriation process works.

The “jobs” component of this bill is the elimination of sales taxes paid on energy by large manufacturers.  Neighboring states do not charge this tax, and economic development officials often cite this fact as part of their struggle to land new employers for Georgia.  While it does look like yet another gift to Georgia Power, the reality is that sales taxes are generally used as taxes on final good sales, and energy is a cost of the manufacturing process.  Thus, as a cost of production for goods that will ultimately be charged sales taxes again, the current tax structure does represent double taxation similar to how a VAT would work.  It’s a good cut.

Individuals who are married also receive a large income tax cut, as personal exemptions are gradually increased.  The $150 Million per year tax cut by 2015 is the largest line item cut from the state’s coffers, and is roughly equal to the amount local governments will lose from cutting tag taxes.

Smaller items in the bill include an extension of exemptions for jet fuel taxes for certain airlines (Delta says “thank you” and would like you to remit a $25 “thank you” fee), expanded sales tax exemptions for products used in agriculture production, and the elimination of sales taxes on construction projects that have “regional significance” (The Atlanta Region Falcons “thank you” for this and the other $400 Million of tax dollars you’re about to give them for a stadium that will be used 8 days per year).

On balance, the bill is neither a huge tax cut nor increase.  It is significantly smaller in scope than the original goals established when the project was conceived.   There are winners and losers, with local governments bearing the brunt of lost revenue.  Thus, state lawmakers will be taking credit for a cut, and local lawmakers will have to ensure they can balance their budgets within current millage rates or face the ire of voters as they raise taxes to replace lost revenue.  Adding to their degree of difficulty are continuing falling home prices, further cutting their tax base.

The biggest opposition to the bill thus far has come not from within the legislature, but from the TEA Party.  TEA Party Patriots member Debbie Dooley has been actively criticizing the move to reveal the bill to the public only a day before it was passed out of the House, calling it a Nancy Pelosi like move.   While connected insiders were clearly consulted on the bill’s contents, the public was not.  Consider this yet another log on the fire of TEA party members further motivating primary challenges in July.


  1. CobbGOPer says:

    And once again, single Georgians with no dependents get absolutely nothing useful in terms of tax relief, despite the fact that we use the least amount of public resources/assistance. Love getting punished for the crime of not having a wife and brats to suck up all my money.

    • Calypso says:

      Well, with everything you’re saving by not having that wife and those brats sucking up all your money, you can more easily afford to help me shoulder the burden. 😉

        • Sorry, dude. Civilization is built on the nuclear family structure, and the state has an interest in perpetuating it. And if you’re looking to get married for the tax breaks, you’re doing it wrong. Become a corporation.

          • CobbGOPer says:

            It’s just another example of government picking winners and losers through the tax code, has nothing to do with what civilization is built upon. I shouldn’t have to get married or incorporate myself to get lower taxes.

  2. Three Jack says:

    You mention elimination of the Birthday Tax, but if I am correct, that only applies to new car purchases made after 2013.

    As for the rest, this is the final straw for the GOP as far as I’m concerned. This group of legislators is far worse than the dems they replaced because at least the dems are honest when they run on raising taxes and spending buckoo bucks. The GOP just flat lies, then says, “too f’n bad, you’re going to re-elect me anyway…hey Larry Lobbyist, pass me another margarita and make sure you spell my name correctly on that contribution check!”

    Good luck Debbie Dooley. I don’t think you are approaching the challenge correctly, but I wish you and the TP nothing but the best in the coming election season fighting these well funded, tax and spend liberal posers.

    • debbie0040 says:

      Thanks Three Jack. You may be surprised at the strategy we are using. There is a reason for everything we say and do and it may not be apparent until a few months down the line. Be patient…Everything leads to another…. 🙂

      • NoTeabagging says:

        Gee Debbie you make it sound like we are following a season of ‘The Walking Dead’.
        Of course, if a herd of zombies were headed for the Gold Dome, chances are they would keep on walkin’, “No Brains Here.”

    • saltycracker says:

      The media doesn’t really cover the tag/tax situation well – lots of things we can assume
      The Tax Foundation link only said:

      •Eliminates annual property tax on cars, replacing it with a one-time title tax

      So until the details are posted I’ll fantasize about wife & I selling our cars to each other for $10 + 7% and no more ad v.

      • There’s no more ad valorem tax for as long as you keep a car bought after March 1, 2013. There’s no sales tax either -but when you get a car titled, whether you bought it from your wife or a car dealer, there’s a “title fee” based on 7% of the value. (Which may or may not be what you paid for it.)

        • saltycracker says:

          New & Used ? Define car ? Trucks stay with ad v ?
          What is an SUV or vehicle built on a light truck chassis ?
          What is a Cadillac SRX, Hybrid, ESV or EXT and similar vehicles ?

          Might not be a good idea to buy a car, particularly from a dealer, unless you just have to, until 3/13.

          • saltycracker says:

            Never mind – the media today says “motor vehicles” and a tax that tops out at 7%.
            Guess they use a little black book of values and tax when you transfer title to something you might ride in.

            Not to worry, we’ll figure it all out after the gov signs it !

        • Batterycap says:

          To say the transfer tax has been given short shrift is an understatement. This is the culmination of the goal of a whole bunch of new car dealers and their willing accomplices in the legislature to eliminate the ability of an individual selling a car to another individual to pay no sales tax. It is really the imposition of a tax on poor and lower income people on who depend on each other to find and keep a means of transportation. Now, when Uncle Billy transfers a car to niece Alice, even for no cost, somebody has to come up with an amount of approximately 7% of the value of the car to hand over to the the State of Georgia. You say you will sell it for $10 – so what. The value will be accessed in a book. Your agreed upon sales price will be irrelevant.

          Watching the unintended consequences of this will be fun. I think a lot of cars will not be transferred but will instead stay in one family members name. Also, this has got to be a boon for the engine and transmision rebuilders. Why give the state 7% when you can put that money in a new short block and keep on going.

          All-in-all, a good day for the new car dealers that hold sway over so many of the RINO’s in the GA state legislature. Not such a good day for the average Georgian trying to hang on.

          Take names and remember this day next election day.

    • Max Power says:

      I guarantee the tag situation will be FUBAR very quickly. Just how is this going to be enforced, how are police expected to recognize tags of vehicles purchased after 2013? What about emission testing? Are we going to go back to stickers in our windows like we had way back when? We are a state governed by fools, crooks, and scoundrels. The very fact this was forced through at the last minute indicates they don’t want anyone thinking about it too hard.

      • taylor says:

        Just because you don’t pay ad valorem every year doesn’t mean you have no tag. You’ll still be required to have an emissions test and an annual sticker. The annual tag fee – I believe it’s $20 if you have a standard tag – is unchanged.

  3. gcp says:

    Instead of moving Ga. towards a sales tax and away from the income tax as Texas and Florida have done we get this mess. Early in the session Rep. Abrams said in an interview that she did not want to increase the sales tax because she did not want to “tax living.” Well I think it is time to tax living and move away from taxing income.

    • Calypso says:

      If we could somehow find a way to tax stupid legislation, our state government would generate enough money to run itself. Kinda like one of those perpetual motion machines.

      • saltycracker says:

        Your wish has been granted.
        It isn’t cheap to die in this well regulated business from controlling who can sell caskets, get licensed to process your corpse and provide all necessary services plus tax.

        Lobbyists & PAC:
        Per the Georgia Funeral Directors Association:

        STATE AND FEDERAL LEGISLATION: GFDA maintains a government affairs lobbyist who continuously monitors legislation of interest to the funeral service profession. Our lobbyist works closely with the Executive Board and Executive Director to monitor legislation and express views of the association to elected leadership of Georgia. Additionally, the lobbyist maintains close working relationships with state regulatory agencies, related funeral industry organizations, the insurance industry, and the business and legal communities. On the national level, GFDA corresponds with members of the Georgia Congressional Delegation regarding federal issues of concern to the funeral profession.

        The association maintains the Georgia Funeral Directors Association Political Action Committee (GFDA PAC). The GFDA PAC forms the basis of contributions to political campaigns and allows the association to take a proactive stance in the elective process in Georgia. Through the GFDA PAC, the association lends our support to candidates who are advocates of GFDA views and opinions as regards funeral service profession legislation.

  4. xdog says:

    Last year Stacy Abrams showed she had a better grasp of the economics behind the tax re-do than the GOPer leadership that was fronting the bill. That wasn’t hard, since the only numbers the GOPers had were wrong, but Abrams was still right in her figuring and came out looking smart and tough, both of which she is.

    Well, leadership is almost always bright enough to learn how to keep the perks of power, so we get the speed rush of this year’s session. You can’t blame GOPers if they don’t want that smart woman talking down to them again.

    • ted in bed says:

      I’m on the opposite of the gun issue from Minority Leader Abrams, but I have huge amount of respect for her, her accomplishments, and smarts. I wish she was a Conservative.

  5. Jon Richards says:

    So, if “sales taxes are generally used as taxes on final good sales, and energy is a cost of the manufacturing process”, then why does a company, for instance Waffle House, have to pay sales taxes on the energy it uses to heat and prepare the food it serves? Or for that matter, why does Tanalach Media LLC have to pay sales taxes on the energy used to power the computers used to post articles to the PeachPundit website?

  6. SmyrnaSAHM says:

    To any local government that relies on this promise, I say, “Oh, honey. Bless your heart.”

  7. debbie0040 says:

    Got back from D.C. aand the Tea Party Patriots Road To Repeal Rally. I spoke to tea party activists from all over and found out that when the GOP controls all branches of government they behave the same way. You know the old take it or leave it this is the way it is going to be. Rushing through legislation without giving time to study it, Yea we may except lobbyist gifts andbut hadn’t you rather it be us that accepts all these lobbyist gifts instead of the Democrats? Tea Party activists from red states had many complaints about the way the GOP governed on the state level. Mississippi is already seeing signs and Florida is in the same situation as Georgia except Florida had the good sense to pass tough ethics reform. The gift limit is 25.00 and contrary to the talking points of those in Georgia that oppose caps on lobbyist gifts, it is working. Activists in Florida feel the legislators took a much need step in the right direction by passing caps on lobbyist gifts.

    • The Last Democrat in Georgia says:

      Kudos to you and the Georgia Tea Party Patriots for keeping your collective eye on the ball and staying focused on legislative ethics, especially within the notoriously ethically-challenged Georgia General Assembly.

      I know you guys don’t necessarily get much credit around these parts, but you all have been out front on some really important issues as of late, like the protest bill and the recent tax reform bill that was rushed through the legislative process with virtually no public comment or debate.

      What was really impressive was that you all went to bat for such groups as the Occupiers and labor unions on the anti-protest bill, two groups with the Tea Partiers are usually diametrically politically opposed on many, if not most, issues.

      • debbie0040 says:

        Thank you !! The issues above you mentioned are not left vs. right issues, they are right vs. wrong issues.. We understand that we will be more successful if we are willing to work with all groups that agree on an issue we advocate. Just because you don’t agree on certain issues, does not mean you can not come together on issues you agree on..

        An interesting note is that we have tea party members that are union members and it is estimated that 30 -35% of union members in Georgia are conservatives..

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