Lawmakers start work on tax plan

By Chris Joyner

The Atlanta Journal-Constitution

State lawmakers charged with weighing the merits of a proposed overhaul of the state's complex tax structure used their first meeting Wednesday to stake out positions on some of the toughest issues, including whether the proposals are too hard on working-class families.

From the start, Rep. Mickey Channell, co-chairman of the Special Joint Committee on Georgia Revenue Structure, set the tone for what will be a long slog through the muck of Georgia's tax code over the next few months.

"We are not all about speed here," said Channell, a Greensboro Republican. "We want to understand what we are doing."

For the next two hours, representatives from the Special Council on Tax Reform and Fairness, which spent more than six months working on the plan, walked legislators through a proposal to lower and flatten the state's income tax and shift the burden onto consumption taxes, such as sales taxes. Both the council and the joint committee were created by the General Assembly last year and charged with making the state's tax code more stable and to attract growth to the state.

Speaking before a committee room packed with more than 100 lobbyists and other observers, committee member Sen. Steve Thompson, D-Marietta, summed up the general apprehension many lawmakers feel about the council's plan.

"A lot of us are nervous because we are dealing with real dollars," he said. "Somebody is going to pay for [the changes], and nobody wants it to be them."

Georgia Tech economist Christine Ries, one of four economists on the tax council, said one of the guiding principles of the plan was to lower taxes on activities the state wants to support -- such as business growth and employment -- and balance that with shifting the tax burden elsewhere.

To start, the plan recommends flattening the state's income tax, lowering the rate from 6 percent to 4 percent, and eliminating most credits and deductions, including existing exemptions on investment income for retirees. The council also recommended retaining the dependent exemption for children, but lowering it from $3,000 for couples to $2,000.

The resulting cut in revenue would be made up with higher sales tax revenue, according to the plan. Council member Brad Dickson said the plan recommends a low-income tax credit to offset the loss of deductions and credits for the poorest of Georgians.

Ries said the plan allows the General Assembly to continue to lower income tax rates below 4 percent as needed to make the plan "revenue neutral," meaning that no additional taxes would be generated by the changes.

House Minority Leader Stacey Abrams, a member of the Revenue Committee, said the plan hits working-class families too hard. Abrams, D-Atlanta, said families earning between $45,000 and $75,000 a year would pay $540 more a year in taxes while higher-income families would see their taxes fall by about $500.

For some families, that amount of money means having to choose between food and gas some weeks, she said.

"These are real economic decisions made by families," she said.

Lurking in the background of Wednesday's discussion is a proposal to place a 4 percent state sales tax on groceries and the proposed elimination of a host of sales tax exemptions on services from home repair to tax preparation to haircuts. Fatigue and a time limit on the room postponed that discussion until another day.