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Monday, December 31, 2007
Tax, spend? Sky shouldn’t be the limit
The Atlanta Journal-Constitution
The year of the GREAT tax debate dawns. For me and for the rest of Georgia, it’s a hard sell.
Republicans who consider themselves fiscal conservatives should be exceedingly wary of creating a tax structure that enables the Big Spenders to grow government easily and painlessly. Expanding Georgia’s sales tax to services without planning to eliminate some other revenue source — the corporate and/or individual income tax, for example — is to make Republicans the design team for financing the welfare state.
Georgia should, instead, be applying the cap to state government spending that House Speaker Glenn Richardson, the GREAT plan’s author, proposed initially for city and county governments. Versions of the cap have been floating around the Capitol. One, in fact, has already passed the state Senate. Generally such caps have flexibility built in to account for hard times, but otherwise they attempt to hold state spending to inflation, plus population growth.
A cap is a better idea for state government than for local since the state is more mature. North of Atlanta, for example, a cap would have been a lousy idea because, for a brief spell, locals need to spend out the wazoo to build the roads, parks, fire houses, schools and other infrastructure needed to accommodate rapid growth. But when cities and counties mature, as is the case with Cobb, DeKalb or Fulton, a spending cap is desirable. It alerts residents to the growth of government.
Swapping a portion of the property tax for higher taxes on consumption may be good politics, but it’s not good policy. Except for medical services and services provided to businesses, virtually everything else Georgians buy would be taxed at 4 percent: real estate transactions, banking, memberships, personal services, travel, moving and storage, real property and others. In return, homeowners would get a dollar-for-dollar tax credit for the school portion of their property, and motor vehicle owners would get a tax credit for both schools and local government. The tax exemption on groceries would be eliminated.
It’s not clear that the reduction in property taxes would be of net benefit to many homeowners, since they’d lose a deduction on federal income taxes while paying a greater sum in sales taxes. Now one or the other can be deducted, but not both.
Under the proposed GREAT plan, with some limited exceptions, all property owners could be freed of the obligation to support schools, depending on revenues.
Another tax of at least $10 per vehicle — this to finance a statewide trauma network with a starting cost of $100 million — would be levied back on vehicles under another bill being proposed.
Looking at it from a Big Government financing perspective, Georgia would eliminate neither the property tax on real estate — which I’m not advocating — nor on motor vehicles. And for the first time, Republicans propose to levy a tax on services, an idea that has been floated by Democrats for years with no takers.
If you’re the least bit skeptical that elected officials have the discipline to exercise spending restraint, this particular swap should raise red flags. The old property-tax structure for real estate and vehicles is still in place, but now sales taxes will be extended to new territory. A barrier is down. A wall is coming down, the wall between goods and services for tax purposes.
That’s a major leap. Reality is, as we’ve seen in Congress, spending restraint is not a characteristic of either party. On that, Republicans can’t be trusted any more than Democrats. They need walls. They need ceilings. They need barriers that at least cause the public to notice when government is expanding.
Tax reforms should favor simplicity. This one would make tax collectors of all service providers. And, to have a notion of how much they’re paying in taxes, consumers would have to keep track of every purchase they make. Property taxes may be reprehensible to some, but at least they’re simple.
Fiscal conservatives should cut taxes. This one shifts.
Tax policies should stimulate economic activity. This one’s stimulative potential eludes me.
Richardson’s GREAT plan will attract support from those who believe they’ll save more on property taxes than they spend on consumption. But in this instance good politics and good tax policy are not the same.
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New Year’s tradition, Nunn’s plans
The Atlanta Journal-Constitution
Happy New Year.
Since I’ve taken a personal interest in the well-being of most of the regulars who post here, it’s my solemn duty to advise you not to let tomorrow pass without dining on greens — turnips, collards, mustard, or even kale or spinach will do — black-eyed peas and hog jowl. Even the national supermarkets have begun stocking hog jowls, so there’s no reason for anybody in Georgia to risk entering 2008 facing the prospect of being broke, with bad luck and in poor health.
Feel free to discuss New Year’s Day traditions as you see fit but naysaying on the proper New Year’s Day meal will not be persuasive, no matter how intelligently argued. I am entirely certain that as an eight-month-old on my first New Year’s Day, my diet consisted of strained turnips, mashed black-eyes and Essence of Hog Jowl Soup. And the tradition has served me well.
I’ll warn you up-front. I cannot be responsible for anybody here who chooses to ignore this Southern tradition tomorrow, regardless of your place of birth or immigration status.
Since we’re all looking forward to 2008, I’ll draw your attention today to the lead story in the morning paper. It focuses on former U.S. Sen. Sam Nunn’s effort “to push Republican and Democratic presidential candidates to spell out their plans for a government of national unity — an effort that also could lay the groundwork for an independent White House bid,” writes the AJC’s Jim Galloway.
Nunn and former U.S. Sen. David Boren of Oklahoma, another Democrat, will convene 17 political figures who regard themselves as middle-of-the-road. The group includes billionaire New York City Mayor Michael Bloomberg, a former Republican of sorts. They’ll attempt to develop a “consensus agenda” on issues the two parties should be addressing.
Among the issues are the federal debt, national service, the U.S. in the world, and the lack of a comprehensive energy policy.
Ross Perot got us Bill Clinton. End of story for me on third-party movements. Crusading billionaires can pull in 15-20 percent of the electorate. They’re spoilers. So no thanks on Bloomberg.
It would be useful, however, if the effort can be separated from a threat to play spoiler. Nunn and others could raise issues, such as the obligation to perform national service, that have been introduced largely by those with a hidden agenda — rallying opposition to the war, for example.
The opportunity’s there to have a serious national discussion. But not if the outcome is that we get another billionaire on an ego trip running for President.
