Georgia FairTax More Talk Than Reality

This week’s Courier Herald Column:

Tax dollars and government spending are a gold mine for political rhetoric. Whether the concept is whether someone is taxed “enough” or if someone is paying or receiving their “fair share”, candidates and elected officials have an unlimited supply of slogans to assure us that we could all be better if only other people paid more or received less.

The only constant among these slogans, regardless of party, is the absence of specifics and numbers. It’s easy to reassure someone that the government is assisting someone else to get ahead at his or her expense. Math, however, is hard.

Rhetorical sleight of hand is easy at the federal level. Congress, after all, is the only body that can declare it a compromise to cut taxes while increasing spending. State and local governments do not have this luxury. States must set tax policies to raise revenues while making sure they remain competitive with other states. Residents often point to other states when they a tax rate is too high. Companies have shown they are quite willing to relocate to states with lower tax burdens.

A couple of weeks ago Georgia was able to lure Mercedes Benz from New Jersey, largely because of the difference in tax climates. New Jersey has a top personal income tax rate of roughly 9% compared to Georgia’s 6%, and local median property taxes roughly four times that of Sandy Springs according to NorthJersey.com. New Jersey’s sales tax is fixed at 7%, but all of that goes to the state unlike Georgia’s system where the state takes the first 4% and other sales taxes are a local option.

The importance of the lesson from New Jersey is that it is the total basket of taxes that compose a tax burden. Georgians clamoring for tax reform must understand this when devising suggestions.

Georgia represents the cradle of the FairTax movement. Georgia’s John Linder was its original patron saint and Neil Boortz and Herman Cain have been among its primary evangelicals. The concept maintains a zealous following among many within the Georgia GOP. As such, the idea for a “Georgia FairTax” to eliminate Georgia’s income tax is beginning to receive discussion.

Discussion is nice. The math remains hard.

Georgia receives almost exactly half of its revenue from personal income taxes (45.2% of revenues) and corporate income taxes (4.6% of revenues). By contrast, the state receives one quarter of its revenues from the state portion of sales taxes. In the absence of other changes, the state would need to have a 12% sales tax to maintain current revenue streams if it eliminated the state income tax. This rate would not include the up to 4% of sales taxes levied by local governments. Most Georgians would pay at least 14% on all purchases, with purchases made in the City of Atlanta rising to a 16% rate.

There are also options to lower this rate by expanding the tax base to keep revenue constant. The largest segment of goods exempt from sales tax is groceries. Democrats have generally drawn a line in the sand when consideration is given to adding the sales taxes back to groceries, which were removed by Governor Zell Miller. The last time it was considered, it concerned enough Republicans that it was removed from the tax reform package before coming to the floor for a vote. Given the state’s populist mood and the assumption of population trends favoring Democrats, there’s little to suggest that this will be a palatable option to Republicans any time soon.

Then, of course, there’s the problem of Georgia’s sales tax relative to other states – and to internet purchases. Retailers in Columbus and Augusta among other border regions would find that residents would have an incentive to make a short trip to make their hard earned dollars go further. Absent a mechanism to collect taxes from internet sales, Georgians would be further incentivized to make purchases from online retailers who have not invested in the state, hired Georgians, or pay local property taxes.

Those who believe the offset to income tax cuts would/should be spending cuts need to spend some time with those on the legislature’s budget committees and/or the Governor’s budget staff. The campaign pledges of “cut the fat” visit us every campaign season. The reality of five years of budget cutting has left few easy targets. Anyone suggesting this as a remedy needs to be asked for specifics, as they likely haven’t bothered to even look at top line numbers, much have ideas for actual cuts.

When looking at Georgia’s competitiveness, it’s important not to get lost on one rate, be it income, sales, property, gas, or other tax rates. It is the bottom line is that makes Georgia competitive. It is rumored that Florida and North Carolina were in close contention with Georgia to land Mercedes. Florida has no income tax. North Carolina funds just over half of its budget with income taxes, having a top tax rate of 7.75%. Both received strong consideration, and remain strong competitors to Georgia’s economic development efforts.

It’s not whether Georgia has an income tax or what rate it remains that will solely determine our economic success. It’s the overall burden of taxes, combined with how well we use the tax dollars we collect that gives Georgia the economic edge we enjoy today.

55 comments

  1. John Konop says:

    Very good post! The worse part is this type of politics serves as a distraction for getting anything done. We have real infrastructure, healthcare and education issues that need real solutions. Can we not focus on the real issues…..over bs to fire up the bases? Charlie you have done a great job laying out facts verse fantasy…..

  2. Stephen says:

    This should give you a hint at just one of the federal FairTax’s fatal flaws.

    To replace the 3 federal taxes, the FairTax would impose a combined fed +S/L tax rate of 38-70% on virtually everything you by (not just the appx half that GA taxes today), plus another 15% in hidden taxes, and later, a new Income Tax.

    See – http://sceldridge.wix.com/sceldridge

  3. DavidTC says:

    In the absence of other changes, the state would need to have a 12% sales tax to maintain current revenue streams if it eliminated the state income tax.

    Is the assumption that this state ‘fair tax’ would *not* include any sort of prebate?

    Either it doesn’t, and thus it is very regressive.

    Or it *does*, and thus 12% is rather too low, considering we’d also now have to collect taxes to *pay* for this prebate. With a prebate, 12% would be an estimate of the average percentage of income paid after ignoring the prebate…the actual sales tax percentage printed on items would have to be higher, let’s say 18%. (But you get handed a wad of money at the start of the year to cancel part of that out.)

    Of course, setting a high *state* sales tax is even stupider than a high national sales tax. At least a high national tax would require sneaking things through customs. With a state tax, the rich would just buy everything one state over, which, I must remind people, the state of Georgia is forbidden by the US constitution from interfering with.

    It sure is interesting how the people who have decided to simplify the tax system have decided to consolidate it into the tax method that a) discourages spending and thus will slow the economy, b) is quite possibly the easiest one for the rich to the avoid, which hardest for the poor, and c) is the most recessive, in fact so recessive that that they have to invent an anti-tax called the prebate to make it less recessive.

    None of them ever want to tax *just* income (Which is only complicated because we *made* it complicated. Income tax *could* be a form that *employers* file for 99% of people.), or just property (Which is, of course, trivially simple, considering property ownership is registered by the state.) or just assets (Which is admitted somewhat complicated).

    Nope! Let’s tax just *purchases*, that’s the one we’re picking! Let’s build a system that is actually *designed* to let the rich just collect as much money as they want, as long as they don’t spend it. This is, somehow, a good thing to encourage.

  4. jbennettatty says:

    The problem with the analysis is that the author assumes the same tax base as the current Georgia sales tax. Georgia could replace its existing sales, income, and estate and gift taxes with a state-level FairTax(R) – with family consumption allowance – at a rate of 6.1%. See Tuerck, Bachman and Jacob, “Fiscal Federalism: The National FairTax and the States,” Beacon Hill, 2007, Table 3, p. 17.

    • Charlie says:

      Sorry, don’t exactly have that one on my night stand.

      But by all means, please tell us from the table what will be added to the tax base. Because right now you have to triple what you receive in sales taxes to make up for lost income taxes. And that’s going to move well beyond taxation of groceries, increasing the car title tax, etc.

      • jbennettatty says:

        Just Google “Tuerck fiscal federalism” and it comes right up as the first item. The 2007 sales tax base for Georgia is $331.4 billion, including $52 billion in federal and state government consumption. You can print the study out and put it on your night table and read it to cure insomnia.

        • Charlie says:

          GA collected $5,593,609,000 in sales taxes. At 4%, that implies a current base of $139,840,225,000.

          Now, you can run around the internets and Google anything you want, but if you expect anyone around here to spend the time discussing this further with you, you’ll bring your own facts to the table and not expect us to have any idea what the heck you’re talking about, or to go find the difference between the current tax base and whatever mythical base your elders are proposing.

          And if you decide to further engage a discussion that assumes Georgia’s “sales” tax base is 3 times what we’re currently taxing, please be prepared to be very specific on what these things are, by category and amount. In the mean time, most of us who have heard this pitch before aren’t buying what you’re selling. So…good luck with the Google.

          • jbennettatty says:

            The figure is plausible because nothing is exempted, including government consumption. And everything is taxed at the same rate.

            • Charlie says:

              “Completely plausible” = I read something somewhere that was what I wanted to hear and therefore I will refer others to it without breaking down the details so others can see the obvious things that make this virtually impossible to implement.

              Let’s start with the one you actually mentioned: “Government consumption”

              For those who have actually made it through an econ class, that’s called Government “spending” in even the most basic of economic models. So in your plausible world we’re going to add 6% to what Georgia’s state government spends, plus what every local government spends (possibly what the feds spend in GA) and we’re going to stay with a scenario that is revenue neutral. You’ve kept revenues the same, increased government spending at the state and local level by 6% (remember much of what is spent by locals is a pass through at the state, think GA DOE spending) and still want to pretend your budget balances.

              By all means please keep this going. I don’t expect to change your mind a bit. But it’s an excellent exercise for those reading who have never checked into the numbers behind this myth, and the imaginary financial gymnastics required to make these numbers “work”.

              • jbennettatty says:

                OK, here’s the whole row of 2007 figures for Georgia (millions): Private Consumption $278,689, Fed Consumption $26,876, State Consumption $25,846, Total Consumption: $331,411, Prebate Base $63,395, Non-Taxable Government Spending $7,762, Net FairTax(R) Base with Prebate (Addition of all but Prebate Base, Subtract Prebate Base) $275,778.

                Remember, items that are not taxable under the Georgia Sales Tax today, such as food, clothing and rent, are taxable under the FairTax(R). The FairTax(R) base is substantially larger than the current sales tax base.

                • Charlie says:

                  You’re still not getting it, but continue to cling to broad swaths of data to convince yourself you’re right rather than answering the questions you need to persuade others you are right.

                  I’ve given you the base that we currently tax. You’ve listed a bunch of almost random categories and numbers.

                  Demonstrate you actually understand what you’re proposing to tax by telling us, specifically, what will broaden the “sales” tax base to three times what it currently is.

                  Clothing? Already taxed. Food? Only unprepared groceries not taxed. By all means, please tell us about your rent tax. Especially if this is a tax that supposes a “rent” from an owner occupied home as has been used in other proposals. Because what you’re really taxing there is property. Thus, you’re proposing to put the state back into the property tax business, but you’re calling it a “sales” tax. Because, fairness. Or something.

                  • jbennettatty says:

                    If you had done your bedtime reading, you would have seen at Page 5, footnotes 2, 3, and 4 that the data comes from the US Census Bureau. I won’t pretend to be so smart that I know better than those ladies and gentlemen. The adjustments and methodology are explained at length in the paper.

                    • John Konop says:

                      ………..The adjustments and methodology are explained at length in the paper……..

                      In all due respect, almost every time I see a fair tax supporter getting called out on facts and methodology….you guys say read the book….. with no real explanation….If you cannot explain it, why would you support it?

                • DavidTC says:

                  Everyone, I think I’ve figured out where these insane numbers are coming from.

                  Georgia’s *entire* GDP in 2007 was $410 billion. And the GDP includes taxes. Take those taxes out, and you plausibly have the $331 billion, or somewhere close to it.

                  The problem is, of course, that this is nonsense. The GDP is basically the sum of all money paid anyone for anything. It includes things like capital gains (Which this proposal does not tax) and rent (Which jbennettatty oddly thinks this proposal taxes, but it probably doesn’t.) and all sorts of things that are income but do not actually involve any good being sold, and hence *are not sales taxed*, like a contractor working on a house. (And also some things, like charities, are exempt from sales tax, but possibly this proposal changes them.) And stuff like real estate sales which are not currently under ‘sales tax’.

                  And of course, as David C pointed out above, the state cannot actually tax Federal spending. Nor, I must add, can it logically make any money taxing state spending!

    • Al Gray says:

      The Fairtax base includes services, rents, health insurance premiums (including employer-paid) and even payroll of providers of taxable services, which include governments.

      That 6% state rate is predicated upon expanding Georgia’s sales tax base to that incorporated in the Federal H.R. 25 and, as elsewhere noted doesn’t cover local sales taxes, which are now up to 4% in Georgia.

      I have much of my being in the redneck hunting and fishing culture – people who have been indoctrinated into the Fairtax scam – but they get pretty P-O’ed when they learn that a 30% (34% if you believe John Linder’s explanation on CSpan) federal sales tax would apply to hunting land leases. Now y’all want to up that to 40%?

      Charlie’s 12% number is right, using the existing tax base, IMHO.

      • DavidTC says:

        The Fairtax base includes services, rents, health insurance premiums (including employer-paid) and even payroll of providers of taxable services, which include governments.

        Wait, what? It taxes *payroll*? How is that a sales tax?

        • Al Gray says:

          Yes, it taxes city and county payroll. Now what this would mean is that the local government could charge the GeorgiaFairtax on services like water, sewer and garbage collection to collect the tax at “retail.” However, other taxable services not easily charged on a “retail” basis would see the tax imposed on payroll.

          Even the AFT.org site sort of admits that the consumer “might not” have a choice as to whether to incur the FT as relates to local government fees, taxes, and licenses.

          The FairTax does not necessarily impose a burden on state and local governments; it simply transfers purchasing power to state and local taxpayers from state and local government. It would be up to state and local government, under the FairTax, to decide whetherto permit the transfer identified here to take place or to recapture the lost revenue by raising tax rates to maintain revenues or otherwise change their tax laws.

      • Stephen says:

        Al,

        You said 40% -its HIGHER

        If we have any evasion or legal avoidance of the FT that could go up to 70% (ar a 30% evasion/avoidance rate).

        If the States fight back and win that the fed govt taxing States govts is unconstitutional, then add another 15% to that.

        Don’t forget another 15% in taxes that the FT HIDES – mostly another 12.5% of the total because fed +state govts must pay FT and get that back form you, one way or another (the rest is from a higher federal budget for almost 30% SS & all federal pension COLAs and from fraudulent SS benefits “invited” by FT’s removal of he tax “penalty” for reporting SS Wages.

  5. marcusmcghee says:

    Charlie, you are right math is hard. You also don’t get credit if you don’t show your work. Where did this 12% number come from?

    • Charlie says:

      “Georgia receives almost exactly half of its revenue from personal income taxes (45.2% of revenues) and corporate income taxes (4.6% of revenues). By contrast, the state receives one quarter of its revenues from the state portion of sales taxes.”

      If we currently tax sales at 4% and get 25% of the states revenue, and we eliminate the income tax that generates 50% of the state’s revenue, then you’re going to need the sales tax to generate three times what it currently generates.

      I’ll leave the algebra to you. Be sure not to look on anyone else’s paper.

      • DavidTC says:

        If we currently tax sales at 4% and get 25% of the states revenue, and we eliminate the income tax that generates 50% of the state’s revenue, then you’re going to need the sales tax to generate three times what it currently generates.

        Yes. Somewhat.

        You are correct that the sales tax would need to generate an average of 12%, but incorrect that the *rate* would be 12%. With a prebate, the rate would need to be higher.

        • Charlie says:

          I don’t think any “serious” person at the Capitol is talking about trying to do a state level prebate. The one’s I’ve heard mention it have just hijacked the “FairTax” buzzword so they can sound like they’re on the tax reform flavor of the month. What they want to do, generally speaking, is usually couched as “phase out the current income tax and replace it with a consumption tax”. My illustration is to point out that isn’t likely any time in the near future, and if it were, the sales tax rate would do a hell of a lot more to boost the economies of Chattanooga, Phenix City, North Augusta SC, and Tallahassee than it would Georgia.

          • gcp says:

            Fla. and Tenn. don’t tax earned income. Why would Georgians shop there if Ga. eliminated its income tax?

            • Charlie says:

              If our sales tax is 8% higher than theirs, I think that’s enough incentive to make a short drive for major purchases. Or, to jump on the internet with companies that don’t have a physical presence in GA to save the 14%-16%.

              The higher the differential, the more incentive to not shop local.

              • John Konop says:

                You are especially right with high ticket items….years ago I helped on a study in the credit card industry, and we could see the behavior change starting at about $100 purchase with discounts……obviously higher the purchase price, behavior changed further…..If you spent 10k on a product a year $800 is a real savings to must people….with gas being cheap makes it easier…..With a 14 to 16% savings that does not include internet incentive as you pointed out…..

                • gcp says:

                  About the only thing folks buy over 10,000 is a car and Ga. would tax you when you title it in Ga. As for other big stuff, I can’t see many folks running to Alabama and hauling a dishwasher back to Ga. to save $20.

              • saltycracker says:

                I’ll save you the drive as I’m back and forth to FL. A lot. That $8k pinkie diamond ring you want – $1200 ST…..let’s talk…..I’ll make you a deal you can’t resist…and better if John buys that big diamond for his ear or was it nose ?
                Might even get it in duty free Cuba !

              • Al Gray says:

                Imagine the tax losses on construction materials. Remember, steel, concrete, and civil construction materials remain sales taxable even for manufacturing (except mega projects). If they can be bought at 8% less out of state then imported, that is a big savings. Yes, they would have to pay use taxes to Georgia to make up the difference, but use tax returns fall outside of the same effective retail sales tax collection system and are prone to nonpayment.

                  • Al Gray says:

                    Purchase of untaxed materials from out of state which are then brought into Georgia has always been a compliance problem. The construction industry has been such a source of noncompliance for sales tax that they have to register under a separate category which is identified to sellers as being strictly subject to tax. Construction contractors cannot extend exemption certificates to their suppliers, except in cases of major manufacturing customers.

                    Unless this has been changed in recent years, school constructors have to pay Georgia sales and use tax of materials used to build for otherwise exempt school boards. The school boards did not have the option of buying the materials under their own exemption certificates, because Georgia law imposed use tax on the contractor the instant that they took the materials out of the owner’s untaxed inventory.

  6. saltycracker says:

    C, Well said. And competitiveness is one reason property taxes will stay around, it’ll take between 1-2% sales tax increase just to eliminate it for homesteaders. I’m for that.
    The tax codes need revision to simplify the process, enforcement and lobbyist/political playgrounds, not eliminate the variations.

    • Charlie says:

      One of the points that I wasn’t able to fit in/drill down on is that the state is virtually out of the property tax business now. That’s almost exclusively a local government function. That’s one of the reason we have issues with trying to balance the books as we have them now. 75% of the state’s revenues are from two sources (sales tax, income tax). If you look into the “other” some of them (car tag tax) are sleight variations of those.

      • saltycracker says:

        Yes, was maybe confusing by lumping state and local in as both are in play and I was thinking on HOST, SPLOST, ESPLOST.

  7. Jim Duffie says:

    A FairTax model bill was formulated by a State Senate Finance sub-committee last year, with a prebate, and no exemptions, that was analyzed by a Georgia State economist, who concluded that, in order to replace the tax income from our current system and economy, the total state sales tax rate would by 6.4%. That analysis was based on a static model, not even considering the positive economic impact of eliminating the regressive income tax. I wish people would post comments from a position of knowledge and research, instead of off the cuff assumptions, or agenda based talking points. Go to http://www.GAFairTax.org for more information.

    • saltycracker says:

      Couldn’t find the link as it relates to the state income tax. All I saw was Federal.

      Am aware of a run a few years ago to replace property tax with a fair (great) Sales tax and after the educational crowd got done with legislators they all denied…..

      Charlie transitioned from fed to state:
      “As such, the idea for a “Georgia FairTax” to eliminate Georgia’s income tax is beginning to receive discussion”

      In any case as earlier posted the Federal Fair tax cannot pass the acid test of compliance and enforcement at a 23%\30% level.

      • saltycracker says:

        To replace the state and federal income tax, forget property tax, would drive that number thru the roof.

        A flat income tax approach with few variables is the only feasible route nationally and state and a sales tax increase eliminating homesteaded property taxes and corporate income taxes is aroute for the state to run some numbers on.

    • Charlie says:

      See above for the “static model”. You’re expanding the tax base well beyond “sales” to get to anything under 10%. If you’re taxing “services”, be aware that most of them are what under the current system we call “income”. That’s fine if you want to do that (I guess), but anyone that is expecting “positive economic impact of eliminating the regressive tax” should understand that if you’re taxing the same sources, generating the same revenue, you’re actually not changing anything and therefore shouldn’t expect a positive (or negative) impact.

      • John Konop says:

        Stop with the facts please…..it makes it hard for the pro fair tax people to debate :)….they do much better with the I hate the government sales pitch, and forget the real facts….The guys do throw great rallies…big crowds, cheering…..just like a football game…

  8. androidguybill says:

    Before you contest his huge sales tax increase thing:

    1) Libertarians like Boortz have long rejected the idea of progressive taxation.
    2) Libertarians like Boortz have long supported shifting from property and income taxes to consumption taxes (which affluent people incidentally have many ways to evade)
    3) Libertarians and other fiscal conservatives have long promoted flat taxes and other tax reform ideas as a way to reduce the size of government by “starving the beast.” So the idea isn’t that enacting FairTax would require increasing sales taxes to 12%-16% in order to be revenue neutral because they aren’t trying to be revenue neutral in the first place. To them, the FairTax would be a way of forcing the government to eliminate most of their services – because they would be no longer able to afford them – and let the private sector replace them. For example: over half of Georgia’s budget is spent in public K-12 education, and Boortz and his adherents have long advocated the abolition of public schools. Not public school reform. Not school choice with charter schools plus some limited vouchers/opportunity scholarships. Boortz wants public education to be ended entirely, not merely because he feels that such schools are liberal indoctrination camps, but because he legitimately feels that education at taxpayer expense is not the role of a properly limited government, and that people should not have children that they cannot afford to educate (Boortz is staunchly pro-abortion I might add) and that private charity organizations should raise the money required to educate the truly needy.

    That is just one example, but FairTax and supporters of similar flat tax ideas see the significant reduction in revenue flowing into state coffers as a result of their ideas to be a feature, not a bug, because lower taxes/flat taxes and significantly cutting the size and scope of government go hand-in-hand. This is not the more moderate sell pushed by George W. Bush and Jack Kemp and John Kennedy, which was that cutting taxes would more than pay for itself because the resulting economic growth would create more revenue than slow growth that is produced by an economy hampered by taxes. Instead, they promote FairTax and similar to then create the revenue shortfall that forces the need to cut government programs instead of the more straightforward pitch of cutting government programs and then using the lack of programs to fund as a rationale for cutting taxes.

    FairTax is a “starve the beast” scheme and people either aren’t aware of this or aren’t being honest about it.

    • Al Gray says:

      It collects no tax because every household in America and Georgia can become a “business” just by asserting that they are a retailer empowered to buy tax free. Also, there is no collection mechanism to tax imports when they enter the country and are dispersed. There is no mechanism to tax exempt purchases converted to taxable uses.

      Anyone can issue exemption certificates and hence everyone will.

    • DavidTC says:

      (which affluent people incidentally have many ways to evade)

      It’s not just the obvious ways of evasion by buying elsewhere, either.

      You want a new table under FairTax? You buy one, let’s say it’s $20, and you pay sales tax on the entire price, and you get a $20 table for $25 dollars or whatever.

      If you’re rich, though, you can *hire someone* to build you a table, though, they buy the rare materials (let’s say $5), you pay them $95, and you get a custom-built $100 table..and you (Or them, depending if they count as a contractor or not.) just pays sales tax on the $5. So $1 in taxes instead of the $25 you should be paying.

      Granted, that’s a bit of silly example, because *in theory* hiring someone to build a table costs more than $24. OTOH, if you *already* have a handyman on staff…well, it’s a no-brainer, isn’t it?

      This is the sort of thing rich people do now, not as any sort of tax avoidance scheme, but that’s simply the sort of way they live, and it’s one of the reason that sales tax is so regressive.

      Hiring a maid as staff? No sales tax. Hiring a housecleaning service once a week? Sales tax.

      And under FairTax, *that’s all the taxes that would exist*. Income tax for the maid and handyman goes away. Under the FairTax, a rich guy can live in a world where he pays *no taxes at all* to have his clothes washed, while a poor person is *paying sales taxes at the laundromat*, and a middle income guy paid sales tax on his washing machine. (But at least *he* doesn’t have to pay any tax to have it repaired.)

      The poorer you are, the less likely you are to hire people (Which indirectly costs people income tax) and the more likely they are to just buy things. (Which costs people sales tax.)

      Guess which one we’re talking about replacing for the other?

  9. Max Power says:

    You know when you compare Georgia’s taxes to those of New Jersey maybe we should also consider what you get for your tax dollar. For example Georgia depends on the federal government for something like 40% of its revenues, New Jersey only 25%. In New Jersey 83% of students finish high school in Georgia, sigh… In New Jersey you have a statewide transit network that makes it possible for people to live in the burbs and work in city without spending hours in the car, etc, etc, etc. There’s an old saying that you get what you pay for and it’s especially true when it comes to taxes.

  10. Al Gray says:

    When Georgia passed the exemption for sales tax on energy, Augusta Commissioners were warned that they would be seeing $millions in revenue losses, because just one plant paid $1.5 million a year. Two years into the phase in of that exemption, they were forced to raise property taxes to replace the lost general fund revenue from just 1% of the 3%(including ELOST) surrendered.

  11. Al Gray says:

    If the legislature replaces the income tax with a sales tax, what will the industrial recruiters be able to give new industry to Georgia? Jobs credits give away corporate income taxes, plus the employee income taxes up to more than $5000 per job.

      • Al Gray says:

        Politicians wouldn’t have the bragging rights and throw-around money to, well, be politicians.

        Now that might be fun to watch.

  12. Dave Bearse says:

    There is incremental reality. It doesn’t look good for a gas tax increase, and AFP et al won’t countenance a state sales tax increase without an income tax cut.

    An increase in the gas tax, or a lack of AFP countenance on a sales tax increase, would make pledge-breakers of significant fraction of the General Assembly.

  13. Al Gray says:

    Another aspect of a state/local/federal “Fair”tax is that it imposes the tax on excess interest rate charges as taxable financial services. In other words, about 15% of the usual 18% credit card interest would be subject to the 23/30% Federal FT and the 6/7% state FT rate and the 6/7% local FT rate.

    How are nearly destitute people paying astronomical interest rates going to afford that? How likely is Georgia to collect that?

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