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AJC.com > Legislature > Blog > Archives > 2007 > January > 11 > Entry
DEL.ICIO.USHouse Speaker proposes overhaul of taxes
The Atlanta Journal-Constitution
Georgia House Speaker Glenn Richardson is floating a radical proposal to wipe out property taxes across the state in favor of a 5 percent flat income tax and a 5 percent “consumption” tax.
Declaring the state’s tax system is “broken,” the Republican speaker said the switch to a flat tax could boost spending in the state and result in an overall tax reduction for Georgians.
“It simplifies the tax structure. It is radical, and I think it is 21st century thinking,” Richardson (R-Hiram) said this week in a wide-ranging interview that also touched on a serious ethics complaint he is battling.
Under the proposal, all existing property taxes — including those on real estate — would be eliminated. Georgians would instead pay a 5 percent state income tax, with some exceptions for the poor, and a 5 percent consumption tax on goods and services. Local governments and school boards would not lose any money under the new system, Richardson said.
The idea comes from a former economic policy adviser to President Reagan whom Richardson recently hired to study overhauling Georgia’s tax system. Richardson has started working with Arthur B. Laffer , an economist considered by many as the “father of supply-side economics.” Along with Laffer, the speaker has hired Donna Arduin, a former fiscal advisor to several governors, including Arnold Schwarzenegger of California and Jeb Bush of Florida.
“The change in the tax system will generate more economic activity and more jobs in the state and those things generate more taxes,” said Arduin, a partner with Arduin, Laffer & Moore, an economic consulting firm with offices in Florida, California and Washington, D.C. “We will provide our estimates of those numbers and let the speaker and the policy makers decide what to do with them.”
Arduin and Laffer will report back to Richardson by the end of March, Arduin said.
Richardson’s political action committee, MMV Alliance Fund, is paying Laffer and Arduin’s firm the initial $50,000 cost of its study through private donations, a spokeswoman for Richardson said.
The speaker, a presumed candidate for governor in 2010, said he will likely introduce a measure during this year’s legislative session to put the tax cut idea on the table, but he doesn’t expect a vote on it until 2008. He has also asked Laffer and Arduin to study various other tax cut proposals floating around the State Capitol.
House Speaker Pro Tem Mark Burkhalter (R-Alpharetta), for example, announced Monday that he plans to introduce legislation this month to wipe out or substantially cut the car tag tax. And Rep. Steve Davis (R-McDonough) introduced a bill this week that would wipe out the state income tax but increase the state’s sales and use tax from 4 percent to 8 percent.
During his State of the State address Wednesday, Republican Gov. Sonny Perdue signaled he is open-minded about tax reforms, though he is focusing on a retirement income tax cut for the elderly.
“I think we all agree that we need to take a long, hard, comprehensive look at tax policy,” Perdue said, “and to come up with a fair approach that meets our needs and spurs economic development in Georgia.”
Democrats are urging a cautious approach.
“Let’s walk cautiously,” said Rep. Calvin Smyre (D-Columbus), chairman of the House Minority Caucus. “I don’t want to rush into anything. When it comes to taxation, all things should be put on the table and there should be a lot of discussion across the aisle. It does not need to become a political football.”
For weeks, Richardson has been promoting some type of flat income tax, but he only recently began fleshing out the idea and citing numbers in public. Meanwhile, the speaker is vowing that he won’t let a stinging ethics complaint he is facing distract him from seeking a complete reform of the state’s tax code.
In its complaint, the state Democratic Party is alleging that Richardson had an “inappropriate” and “personal” relationship with a lobbyist for Atlanta Gas Light last year while co-sponsoring a bill that would have financed a $300 million pipeline for the utility. The Democratic Party says the alleged relationship “constituted a clear conflict of interest” for the speaker.
Richardson has denied he had a conflict of interest but has so far refused to confirm or deny the alleged relationship with the AGL lobbyist.
“I don’t remember my enemies very long. It takes twice as much energy to remember who your enemies are than to just go forward with your friends today,” Richardson said. “I am not saying I don’t forget people who have done wrong. But you can’t dwell on that.
“I am going to change the tax structure, or do my dead level best,” he added. “And I’m going to increase Georgia’s education scores. … Those are two big things that I think Georgians want.”
Richardson indicated he would elaborate on his education proposal at a later date.
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