Be careful what you ask for, because you may get it. That old saying has likely been on the minds, if not the lips, of many members of the Georgia General Assembly since the special tax reform council delivered its recommendations Jan. 7.
In this instance, the legislature got what it asked for. They told the council to recommend how to best overhaul Georgia’s inefficient mishmash of a tax code.
The group’s report does outline a system to make state taxes more fair and less complex. That will help Georgia be more effective in competing for jobs and investment.
The tax council’s work simplifies who owes what and when, but it couldn’t make any more popular the basic idea of remitting a portion of our hard-earned dollars to the state. And therein lies the challenge for Georgia – one our legislators should have the courage to face head-on.
There’s reason to question if that will happen this year. Lawmakers, including Georgia House Speaker David Ralston, have suggested that the plan might not even come up for a vote in 2011 – a year in which the state is again struggling with a billion-dollar budget hole.
That’s disappointing, given that the law creating the tax council calls for an up-or-down vote, no amendments allowed.
The desire for a quick vote faded after certain interests, such as Americans for Tax Reform, judged the council’s report as a call for higher taxes.
That’s led to the legislative posture that there’s no rush here, dear taxpayers, we’re going to study it all very carefully, perhaps even long enough that the proposal gets lost under dust on a Gold Dome shelf.
Legislators are correct in that the joint special committee should carefully review the recommendations. They should do so quickly enough, though, to meet the promised timetable for an all-or-nothing vote this year.
There are good ideas in the tax council’s report, and also matters that need further tuning.
Like any budget document, the council’s work dealt with how to ensure that multiple streams of incoming taxpayer dollars are sufficient to pay for state government’s basic services. The report urges Georgia to simplify and flatten its current tax structure and end many of the exemptions slapped on through the years. Doing so is good tax policy, we agree.
Broadly, the council recommends that Georgia lower its income taxes over time for businesses and individuals alike while expanding the use of sales taxes. While cutting income taxes will benefit household and business bottom lines every April 15th, applying sales taxes to more goods and services offsets politically popular cuts in income tax rates. We can’t realistically have it both ways, and certainly not in the budget-strapped short-term.
It makes sense in today’s service-heavy economy to widen the use of sales taxes. As legislators struggle to pay bills for necessities such as education and prisons, it’s only right that Georgia extend sales taxes to private sales of cars, boats and airplanes, for example. Doing so repairs a system that had placed at a competitive disadvantage businesses required to collect sales taxes. Taxing haircuts or a set of new tires follows economists’ common-sense advice to spread the tax burden as broadly as possible. It’s not painless, but it’s fair and necessary.
While on the subject of fairness, Georgia can’t ignore how the proposed tax changes would affect the state’s poorest citizens. The legislature should ensure that the final result does not unduly add to the burden of low- and middle-income Georgians.
Income tax credits or exemptions can help here. The controversial proposal to end the tax exemption on groceries sold for personal use would put more of the tax weight on those with modest incomes.
Proposals by the Georgia Budget and Policy Institute to mitigate this effect should be considered. One option calls for keeping taxes off groceries and trimming the income tax rate to 4.5 percent, not 4 percent – which still represents a 25 percent reduction. Lowering the sales tax and applying it to food is another.
The tax council recognized that there’s a significant cost to even a minimal level of government services. The report proposes to pay that bill in a more-efficient manner.
There’s an intellectual honesty there that the General Assembly should fully embrace. Transparent, predictable taxes beat slapdash “fee” hikes and other ill-conceived measures that have angered voters in recent years.
We believe Georgians will agree, if our lawmakers give them a chance. The tax council’s work deserves debate, not delays.