Can Georgia’s Tax Reformers Overcome Grover Norquist?

Just weeks after a six-month effort by Georgia lawmakers to enact ambitious tax reform legislation fell apart, Governor Nathan Deal is signaling that lawmakers may be asked to continue their deliberations on this issue when they return for a special legislative session on redistricting this August.

But if Deal’s views on the shape of “tax reform” are any indicator, a special session could run into the same difficulties encountered during this year’s tumultuous regular legislative session.

The failure of this year’s tax reform effort was due to an inexorable rule of tax accounting: when you design a tax plan that is revenue-neutral overall and gives big tax cuts to the wealthiest families, someone else has to pay higher taxes.

But Deal’s stated goal of shifting to a “consumption-based approach” to revenue-raising would necessarily reserve the biggest tax cuts for the very best-off Georgians, and the Republican leadership’s Grover Norquist-inspired refusal to raise any new revenues through tax reform means inevitably that middle- and low-income families will foot the bill for these high-end tax cuts.

Lawmakers who correctly found this “Robin Hood in reverse” swap unpalatable this spring will presumably feel the same way come August.

The sad part of the story is that this year’s tax battles began as an honest discussion of important tax reform principles. When an appointed Georgia tax reform commission issued its recommendations in January, the focus of the plan was on achieving a more sustainable Georgia tax system by eliminating unwarranted tax loopholes — and the original proposal would have done a decent job of achieving this important goal.

But in the hands of Republican leaders in the state legislature, the plan’s loophole-closing provisions gradually fell by the wayside under pressure from special interests, which meant that this formerly revenue-neutral plan ended up being a revenue loser that missed important opportunities to modernize the state’s tax system.

In their zeal to satisfy Grover Norquist and his no-new-taxes acolytes by removing provisions that would have hiked taxes on anyone at all, legislative leaders lost sight of the broad tax-reform principles that had motivated the reform commission in the first place.

More than anything, this outcome shows the utter incompatibility of the “no new taxes” mantra with the type of sustainable tax reforms that are needed at both the federal and state level. If lawmakers insist that tax reform can’t involve tax hikes on anyone, but must include substantial tax cuts for the best-off Americans, sustainable tax reform simply can’t happen.