Taxing situation
January 26, 2007 at 1:47 pm by Web Editor in NewsGov. Sonny Perdue infuriated members of his own party when he first assumed office and tried to raise taxes on spirits and cigarettes. Now he’s part of a Republican tax-cut charge with a proposal that’s probably the least radical of the bunch.
And the most politically viable.
The governor, a political pragmatist by nature, wants the state to freeze the state income tax on seniors. Meanwhile, a brigade of fellow Republicans in the Gold Dome are falling all over each other in an effort to completely overhaul Georgia’s tax structure and give tax cuts — which mostly benefit the rich — to all comers.
Sen. Mitch Seabaugh, R-Sharpsburg, and majority whip, wants to eliminate the personal and corporate income tax and replace it with a higher consumer tax. "People should choose when they pay taxes by the spending decisions they make," he says.
The personal income tax is the largest source of revenue toward Georgia’s budget, $30 billion when you include federal aid. To make up for the loss, the state would have to impose a considerably high sales tax, or significantly cut state programs.
There are also House Speaker Glenn Richardson’s proposals, which are to get rid of the income tax and property tax and replace them with an increased sales tax and a flat tax. The latter taxes all household incomes at the same rate, which means a wealthy taxpayer barely feels the impact, while someone on the lower end of the income spectrum can get hit very hard.
For his part, Lt. Gov. Casey Cagle favors doing away with the corporate income tax, by taking "incremental bites at the apple" over a period of time.
Sen. Robert Brown, D-Macon, minority whip, doesn’t like the flat-tax proposal, and says he’s "very leery" of a tax shift from income to sales. "Even beyond the regressive nature of a sales tax," Brown says, "it’s an unstable source of income due to dips in the economy. I think all of those (income tax elimination) proposals are wrong-headed."
He says he fears a Republican effort to couple their tax cuts with the elimination of safety-net programs and services, such as the state Department of Community Health. The most obvious question is how the Legislature intends to pay for PeachCare, which gives health-insurance coverage to 270,000 children. Brown says he personally favors eliminating numerous tax exemptions in the Georgia tax code, which he estimates would bring in some $9 billion more a year in revenues.
GOP veteran Rep. Fran Millar, R-Atlanta, says all the tax-cut talk at this time amounts to little more than political grandstanding, pointing out that a governor’s task force is in the process of devising a new funding formula for education, which consumes the lion’s share of the state’s tax revenues. The task force’s findings won’t be ready before the end of the legislative session.
"We will not deal with the funding formula until 2008," Millar says. "You can’t do anything with our tax structure until we figure out how we’re going to pay for our schools."
Alan Essig, executive director of the Georgia Budget and Policy Institute, says Millar is absolutely right. "I think the speaker is throwing out some principles for discussion," he says of Richardson’s proposals in particular.
But while a tax overhaul may seem too far-reaching at this time, Essig adds, a majority of lawmakers in the Republican-dominated Legislature are likely to see Perdue’s more pragmatic tax cuts for seniors as a good baby step toward greater future tax liberation.
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