Georgia’s Special Council on Tax Reform recently released recommendations to overhaul Georgia’s tax structure in a way that would improve the state's finances but also shift taxes to Georgians who are less able to pay.
As anticipated, the recommendations were quite sweeping and dealt with every major tax the state levies. The recommendations included a lot of good base-broadening measures, like repealing the state’s generous pension exclusion, eliminating itemized deductions from the personal income tax, and including more services in the sales tax base. The Council also recommended regressive changes, like replacing the state’s progressive income tax with a flat 4 percent rate, adding groceries back to the sales tax, and increasing the cigarette tax.
The Georgia Budget and Policy Institute (GBPI) offered improvements to the Council’s proposal to prevent tax increases on those who could least afford them.
A House committee came up with their own proposal as a substitute to the Council’s initial recommendations. This new plan includes a 4.5 percent flat income tax rate, no corporate income tax rate changes, and no changes to the cigarette tax. Read GBPI’s complete analysis of this substitute proposal.
The substitute hit a snag too. The Atlanta Journal Constitution reported, “A clunky but effective coalition of Democrats, tea partiers and Baptists forced state Republican lawmakers into a desperate attempt to save their troubled tax reform bill.” The bill even caused infighting between an unlikely cast of characters: Georgia tea partiers and the national leader of the anti-tax movement, Grover Norquist.
Now we are hearing that another set of tweaks to the original recommendations from the Special Council on Tax Reform is in the works and will be unveiled next week. According to the Atlanta Journal Constitution, this latest iteration ensures that more Georgians get a tax cut, but the price tag for such “reform” according to the official fiscal note is $220 million. This latest and presumably final attempt (because of the legislative calendar constraints) at reform is expensive and makes the state’s tax structure even more unfair for low-income families.
GBPI concludes, “It is better to do nothing this session and come back next year with true tax reform than pass a bill that gives large tax cuts to the wealthiest Georgians and a few favored businesses interests, resulting in further cuts to what is most needed for the broad business sector to prosper—education and basic infrastructure.” Read the full GBPI statement.
There were high hopes that the Council’s efforts would produce tax reform that would improve the state’s already flawed tax structure, but if the legislation that stems from these efforts doesn’t ensure fair and sustainable tax reform, then it’s not worth passing.