Fresh Loaf

Gov. Sonny Perdue last week irked many fellow Republicans when he vetoed a bill that would have slashed the state capital gains tax. Critics warned the bill would have cost the cash-strapped state between $340 million and $1 billion in lost revenues.

“I’m scratching my head…If I were the governor, I would have said, ‘Where is that? Let me get my pen.’”

— House Rules Chairman Earl Ehrhart, R-Powder Springs, in the May 11 AJC

“Cutting capital gains taxes would have encouraged more investment into the state. It is a sad day when this type of legislation gets vetoed by a Republican governor.”

— State Insurance Commissioner and GOP gubernatorial candidate John Oxendine in a May 11 press release

“If Governor Perdue vetoes it, I hope legislators will consider overturning his veto. The JOBS Act could do a lot of good for Georgia.”

— David Raynor of the Georgia chapter of the National Federation of Independent Business

“Republicans I talked to in the legislature are angry and demoralized.”

— Pro-growth, anti-tax Wall Street Journal columnist Stephen Moore, writing about Perdue’s veto

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Among the many crazy things to happen on the last night of the General Assembly was the passage of HB 481, a Republican-backed, home-grown economic stimulus bill offered as a response to the federal spending plan being pushed by Pres. Obama.

In its early form, the House bill’s centerpiece was a tax credit for employers who make a point of hiring laid-off workers. But in the waning hours of the session, it somehow morphed into a billion-dollar capital gains tax break. That’s the sort of sweeping policy change that typically undergoes several days, if not weeks, of debate and discussion, as happened with the large corporate tax cut that passed a few years back.

But in this case, lawmakers voted to blow an estimated billion-dollar hole in the state budget almost as an afterthought: “While we’re at it… ” Every Republican reflexively voted in favor of the tax cut because, well, that’s what Republicans do, isn’t it? If you’d taken an extra-long smoke break, you’d have missed the whole shebang.

Just after the vote, I asked Sarah Beth Gehl, deputy director of the Georgia Budget and Policy Institute, if she was worried about the impact the action would have on balancing future state budgets. I expected a fiscal policy wonk like Gehl to be upset over such a rash move by lawmakers, but she shrugged her shoulders.

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