On the Issues
Taxes
WHAT IS THE SPECIAL COUNCIL ON TAX REFORM AND FAIRNESS?
On January 7, 2010, the Special Council on Tax Reform and Fairness ("Special Council") issued its report. The mission of the Special Council was to conduct a thorough review of the state's revenue structure and recommend changes to improve Georgia's economy. It was established by OCGA 28-12-2 (HB1405) to "conduct a thorough study of the state's current revenue structure and make a report of its findings and recommendations for legislation to the Speaker of the House and the Lieutenant Governor no later than January 10, 2011."
WHAT DID THE SPECIAL COUNCIL FIND?
"We've learned much about the state of Georgia's competitiveness in attracting businesses over the last six months. We know that while corporate tax rates and tax credits are important to businesses interested in locating here, other factors have greater weight in their decision. These factors include quality of life, a trainable workforce, infrastructure such as roads, bridges, and transportation, inventory taxation, energy taxation as an input to manufacturing and agriculture, and quality of public k-12 schools."
"Research on business firm location finds that while taxes matter, other factors seem to play a larger role. Factors such as functioning transportation systems, availability of water, and the quality of public education are more important components of the decision making process." See page 9.
The full report can be found online at:
FINAL_REPORT_Jan_7_2011.pdf
The executive summary is as follows:
| Tax | Recommendation |
|---|---|
| Personal Income Tax | Simplify and minimize adjustments; Reduction of 6% rate over time such that rate does not exceed 5% in January 2012; does not exceed 4.5% in January 2013; and does not exceed 4% in January 2014 |
| Corporate Income Tax | Simplify Credits; Maintain Parity with Personal Income Tax Rate |
| Sales Tax Exemptions | Keep Government Exemptions and Keep Business and Agriculture Input Exemptions; Eliminate or Sunset Other Exemptions |
| Food for Home Consumption Exemption (Groceries) | Eliminate Exemption |
| Casual Sales of Motor Vehicles, Watercraft, Aircraft | Impose Sales Tax on Casual Sales |
| Select Personal and Household Services | Impose Sales Tax on Select Personal and Household Services |
| Energy Used in Manufacturing, Mining, and Agriculture | Create New Exemptions |
| Cigarette Tax | Raise to $0.68/pack, the Average of Surrounding States |
| Communications Services | Replace Existing Tax and Fee Structure with 7% Excise tax on Communications Services |
| Motor Fuel Tax | Change Rate Structure to Cents Per Gallon |
| Insurance Premium Tax | Reduce to a Rate of ~1.75% Which is Revenue Neutral for the State |
The Special Council did not make any recommendations on property taxes. See Page 7.
The Special Council found that, reletive to other states, Georgia's taxes are very low. See Page 7.
WHAT HAPPENS NOW?
The Special Council's recommendations go before the Special Joint Committee on Georgia Revenue Structure created in Code Section 28-12-3.
If the Special Joint Committee does not pass a bill or resolution on the Special Council's recommendations, the recommendations will not become law (unless enacted through some other bills or resolutions).
If the Special Joint Committee passes one or more bills or resolutions without significant changes to the recommendations of the Special Council, those measures will go before the House of Representatives for an up or down vote only.
WHAT IS MY POSITION ON THE SPECIAL COUNCIL'S RECOMMENDATIONS?
Among the various tax reform recommendations made by the Council, two are particularly worth noting:
• Lower the personal income tax rate from the current 6 percent to 4 percent by 2014.
• Eliminate the sales tax exemption on groceries.
Although I believe that a diversified tax revenue stream is extremely important, as it decreases the burden placed on all taxpayers, the two recommendations listed above would together shift more of the tax burden onto lower income Georgians. In the current economic environment, where working Georgia families are already struggling to make ends meet, imposing greater strain on their pocketbooks is unfair and unsound.
Rather than making it more costly for Georgians to feed their families, we must look at other options for maintaining a sufficient tax revenue stream as we work to reform our outdated tax code.
Links:
The Final Report from the Special Council
Download the PDF