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Friday, September 28, 2007
House speaker takes tax case to professionals
The Atlanta Journal-Constitution
Dillard, Ga. — What better audience to test a revolutionary proposal on taxation than a gathering of the Georgia Chapter of the National Association of Tax Professionals?
Turns out, however, that the tax preparers, lawyers, accountants and agents who are fattening themselves up for the long tax season to come at the Dillard House, one of Georgia’s finest dining establishments, are almost as much in the dark as the rest of Georgia about the proposal being put forth by House Speaker Glenn Richardson.
That proposal, which not surprisingly has drawn shoot-the-babies and plow-the-fields-in-salt opposition from local governments and school boards, would eliminate the property tax and, instead, expand the 4 percent statewide sales tax to services. It would end, too, most all of the 127 existing sales tax exemptions, including the one for groceries. Taxpayers earning up to $30,000 would get a refund for the tax on groceries and prescriptions.
After listening to Richardson’s explanation, the president of the Georgia chapter, David Fussell of Rome, thought the speaker had done “a great job of presenting it” but was not completely sold and had real reservations that Georgians will embrace it. “From a tax professional’s standpoint, I haven’t seen enough of the [proposal] to fully grasp it. If we become tax collectors for the Revenue Department, that becomes an issue.”
Fussell notes, as did the House speaker earlier, that local governments are manning the barricades. “I live in a small town, and I know a lot of city officials. Small towns being what they are, I don’t think they are going to be willing to give up control to the state.” Richardson has heard their mounting opposition and, in a conversation beforehand, unloads. “The reason why counties and cities and school districts are so vehemently opposed is because they have been able to grow their spending at a greater rate than peoples’ earnings,” Richardson said. “I can’t believe the gall of them using taxpayers’ money to oppose the right of citizens to change their method of taxation.”
Between 1996 and 2006, inflation in Georgia rose 28 percent, he said, while per capita state spending rose 26, spending by counties rose 40 percent, by cities rose 79 percent and by school boards, a whopping 98 percent. Local officials say that’s because of infrastructure spending for growth.
Richardson’s proposal, which he acknowledges is not yet perfected — it’s 85 to 90 percent there, he said — would eliminate all property taxes, including on homes, businesses and vehicles. Eliminating them would deprive local governments and school boards of between $8.2 billion and $8.5 billion per year, an offset that would come from the expanded sales tax. Existing “exemptions” amount to $10 billion per year, with groceries accounting for $1 billion, Richardson said.
All Georgians “ought to have some tax burden,” he said. “We’re rapidly becoming a nation that has more people who are not paying taxes than are paying taxes. That is a dangerous place for this nation to be. If we don’t stop it now we are soon going to kill the U.S. economy.”
The locals would not be deprived of revenues in the sums they’re now collecting. Richardson proposes a formula that would give each local government and school board the same share of the $8-plus billion they now collect. Another formula, now being drafted, would measure growth in the tax digest and give them the higher of inflation or actual property values. In addition, local governments could continue to seek voter approval for a 1 percent local sales tax, a portion of which could be spent on operations.
State spending has to be capped and, as Richardson proposes it, so too would local. He thinks if it’s capped just at the state level, politicians would shift taxes.
His problem with the property tax — by the way, check your mail, they’re coming due — is that 1.5 million homeowners bear half the burden of providing local services for 9.4 million Georgians.
As with the tax professionals, I’m not yet sold on Richardson’s GREAT plan, which stands for “Georgia’s repeal of every ad-valorem tax” and, frankly, may never be — though I share the concern that the nation is building a “gimmee”-class of citizens, now approaching half, who no longer care what government costs because somebody else is paying.
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