Georgia FairTax Bill Introduced in the House

This morning, House Bill 208, the 2015 version of the Georgia FairTax, was read for the first time in the Georgia House of Representatives. The bill would set a sales tax rate of 7.5%, and would provide for a prebate to individuals and families equivalent to half the sales tax rate times 1/12 of the annual poverty level. The bill, which is sponsored by Rep. Tom Kirby of Loganville, represents an update to House Bill 688, a similar bill filed by Kirby in the 2013-2014 session.

Much like H.R. 25, the federal FairTax bill sponsored by Georgia Congressman Rob Woodall, the bill replaces the income tax with a consumption tax. During the current two year legislative term, Rep. Kirby expects tax reform to be under consideration, and he wants a consumption tax, and especially the FairTax to be part of that conversation. While there are details, such as which, if any services would be subject to taxation that need to be filled in, Rep. Kirby said much of the work on the bill was complete.

Kirby arranged for the bill to be read for the first time today so it would coincide with the day Georgians for Fair Taxation visited the Capitol, and he recognized the group in morning orders. After the bill was read in the House, Speaker David Ralston assigned the bill to the Ways and Means committee.

33 comments

  1. Max Power says:

    Is Tom Kirby a magician? Because I would like to see the magic that replaces $10 billion in income tax revenue by raising the sales tax 3.5%.

  2. gcp says:

    Ah yes, its time for all you income taxers to now tell us that 7.5% is not 7.5% but is actually 10%, or is it 12% or maybe 14%; just pick a number as long as its higher than 7.5.

      • Stefan says:

        Also, the higher a sales tax gets, the more people will attempt to avoid the tax by delaying purchases (or purchasing outside of the tax structure). In that regard, it presents very similar problems to deflation.

        • gcp says:

          Lets also not forget the argument that millions of Georgians will flock to Alabama to make purchases to save one or two percent sales tax. (another standard argument made by income taxers)

          • Max Power says:

            I live in Georgia and work in Chattanooga, guess what’s just on the Georgia side of the border, a very busy Costco and soon a Cabellas.

          • Dave Bearse says:

            For bread and milk, no.

            For big ticket items, yes. Augustans and Columbians are well-placed to take advantage of gas price and sales tax differentials.

  3. blakeage80 says:

    So if this passes along with the transportation bill, (not that it will) Does that mean an extra 7.5% on top of the 29.2cent excise tax? Does that mean the the FairTax Bill is a proposed tax increase? 🙂

    • analogkid says:

      Shhh. You need to let the Rs build the mechanism for delivering a cash payment to every Georgia citizen every month before you let them know that it will eventually be converted into the most socialist program ever.

  4. saltycracker says:

    I thought the idea of a fair tax was to keep it simpler.
    Now it appears 1/2 times 1/12th less those exempt of the best programmers are fast at work on an algorithm for a GA fair tax app.
    You’ll just have to wait to see what’s in it.

  5. Charlie says:

    Going to skip the BS arguments about “economic growth” and what not and get to a very technical question as was brought forth in my column on this “concept” legislation a week or three ago:

    The folks that have based this 7.5% tax as a revenue neutral (NOW WITH PREBATE!) have a mythical extrapolation of “consumption” to which to find this number. Have any of them actually talked to the folks at DOR to determine exactly how this number will be identified, quantified, and collected?

    It’s one thing to back into an aggregate number. It’s quite another to know whom, exactly, is supposed to remit this tax, how to find them, and to have a proper (NOT FREE!) collection mechanism in place – with an audit trail.

    Anyone that can’t answer the above question should withdraw their name as a sponsor of this bill that is born of political expediency but always dies the moment it hits the reality of mechanism for implementation.

    • I obviously oppose this bill but I don’t think there’s anything wrong with someone who is passionate about an issue proposing a bill each year even if it isn’t perfect or well thought out as long as the goal is to further debate on that issue. This guy clearly campaigned on this issue for two election cycles in a row and his constituents overwhelmingly supported him. Sure, they aren’t smart enough to know this is a bad idea and poorly thought out, but it’s a representative body, is it not?

  6. Jim Duffie says:

    Most of these comments are not based on real analysis, but on ideology or agenda! If you are interested in factual numbers, please contact Robert Buschman, PhD, economist at Georgia State University, who did a study commissioned by the Senate FairTax Subcommittee, and concluded that in order to replace our current net taxes collected under our current system, would require a sales tax rate of 6.42%, with a full (not half) prebate. It would be a simple, fair, and transparent plan, with no exemptions or exceptions, except federal government expenditures. If you want further details and explanation, ask Phil Hinson, at [email protected], a retired CPA, and expert on taxation, or jimduffie at [email protected].

    • Max Power says:

      I can read and thanks to my Georgia public school education, I can tell that $15 billion is more than $13 billion.

    • Al Gray says:

      He doesn’t have to have any, because the article that he posted by your Dr. Buschman shows that the revenue neutral FT rate calculated upon the South Carolina Fairtax base, one that closely approximates Georgia’s existing sales and use tax base, plus services labor, is 14.68% without any local sales and use taxes, which would add another 5.15% based upon the 4% local sales taxes here in the CSRA region($4718/$13451x 14.68%- figures from Buschman’s piece.)

      The 6.42% you cite is from the much, broader Bureau of Economic Analysis base of Personal Consumption Expenditures and is essentially the base used by the Fairtax.org folks. That base includes all of the truly nutty tax base of “financial services transactions (excess interest rates ala credit card interest)”, government payrolls, employer paid health insurance premiums, and Grandma’s nursing home care.

      The Georgia “Fairtax” bill introduced has very little in common with the Fairtax.org effort, meaning that Georgia Legislators are repudiating the Fairtax as it is being pitched by Senator Perdue’s federal bill. The tax base is considerably narrower, suggesting that your Dr. Buschman’s 14.68% rate would be more accurate.

      Where I might agree with you is that the Georgia Legislature needs to be consistent in application with the federal bill so as to preserve simplicity and avoid forcing taxpayers to meet two standards. This isn’t what the bill introduced does. It confuses the issue.

      • Max Power says:

        Oh my god, once again it’s only revenue neutral in the world of make believe. Why don’t you fair tax supporters admit that you want government revenues to decrease we could take you more seriously then.

        • Al Gray says:

          I don’t think anyone on this site is going to confuse me as being a Fairtax supporter. I just used the link you supplied to prove your point.

          The point that the Fairtax guts government revenues is exceedingly strong, because there is no limitation on the issuance of exemption certificates.

          Duffie used a much lower 6.42% rate when the real revenue neutral rate is 14.68% on a base similar to Georgia’s.

          • John Konop says:

            I for one give you credit for being intelligibly honest about the math…,you have demonstrated this in many other comments.We have to many who fight blindly for their ideology, while disregarding the facts. I have said many times in the paper as well as in public forums, that if it does not pass the financial test first why are we debating the issue? We have to many who argue in a tribal manner….rather than looking at the facts….objective view of facts over what someone feels about an issues would eliminate many debates….what would politicians do than :)….

    • saltycracker says:

      Yes, Georgia’s tax code needs big changes, too much money is spent, wasted and poorly administered messing with a wacky tax code.

      IMO, a real state flat tax would increase revenues and eliminate homesteaded property taxes, with rates around 2% income over $1,000 and 4-5% sales taxes.

      The bigger bonus, society is always better served when all feel equally screwed.

      BTW, not sure how you got to your revenue numbers but as Lawton Sack posted the state take was under $10 billion.

      http://www.peachpundit.com/2015/01/07/december-ga-tax-revenues/

      • Al Gray says:

        He was being generous to Duffie, whose expert cited a net $13 billion after prebate in his rebate-SC-based alternative. That computation is on a base that includes state and local government payrolls, which existing sales tax bases exclude.

        • Al Gray says:

          Would love to see property taxes reformed – 60% of this county is exempt, with massive transfers to homeowners from timberland owners. It is facing a balloon payment on a $32 million school that was to be paid for with taxes on a fraud-riddled $35 million development that resulted in a murder in Tiger Woods, Orlando subdivision. Residential owners are apoplectic.

      • Max Power says:

        If taxes were the main driver of economic growth someplace like Minnesota would be in the pits and Nevada would be growing through the roof. But that’s not what’s happening, in fact Minnesota despite being a frozen wasteland and have relatively high and progressive income taxes is doing just fine. Taxes aren’t the problem they’re part of the answer.

        • saltycracker says:

          Meanwhile back in GA, the original point on changing the code included GA getting more revenue.
          To answer the “you got enough” and the “we need more money” factions requires some thought go into how we are going to get it and where are we going to spend it.

    • Al Gray says:

      Having nurseryman Skeeter McCorkle on the Tax Reform Council got them to be able to do that?
      You don’t say!/s

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