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Tuesday, February 19, 2008
An infernal tax scheme comes back
The Atlanta Journal-Constitution
Republicans this session propose to:
Add a $20 tax to cars, trucks and motorcycles.
Tax speeders.
Add a $1-per-pack tax to cigarettes.
Add a one-cent tax to the statewide sales tax and perhaps another one-cent regionally.
Expand the sales tax to groceries and to 174 categories of services, using the proceeds to reduce property taxes on homesteads and cars, trucks and motorcycles.
Georgians who prefer Democrats and who feared that putting Republicans in control under the Gold Dome represented a lurch to the right needn’t have worried. This is where the old gang left off.
House Speaker Glenn Richardson appeared last week before the House Ways and Means Committee to propose something that Democrats never dared bring forth when Zell Miller and his band started studying tax revision 16 years ago.
At the hearing, Richardson expressed frustration with policy wonks who, he believed, skewed the numbers to help defeat a tax shift that he initially designated as “Georgia’s Repeal of Every Ad Valorem Tax,” though it’s not called that anymore.
He is, in that regard, learning one of the elementary lessons of the old order. Experts and especially those in-house with a preferred policy outcome are almost always able to frame the options so that they get the decision they want from the bosses.
This tax on services was a favorite of the academics during the work of the Joint Commission on Revenue Structure during the administration of Gov. Zell Miller. It ran afoul of Miller’s promise to lift the sales tax on food. Miller won, but while legislators come and go, the love affair with a broader-based tax on services hangs eternal.
A tax on services was then characterized as a way to get the rich to pay their fair share by taxing their pet-grooming, lawn services and their country club memberships. It didn’t fly. Most Georgians know full well that an awful lot of little people are swept up in every scheme to tax “the rich.”
The speaker’s target is illegal aliens.
A tax on groceries and a tax on services extracts revenue from those who either don’t file income taxes or underreport income from a cash economy. In his bill, those who report income that is less than 200 percent of the federal poverty level — $41,300 for a family of four — could get a rebate for the sales tax they pay on groceries, but they must file an income tax return.
The essential elements of the swap Richardson is proposing now were the elements of the three-year study by the joint commission. Ironically, some commission members objected to lifting the sales tax on groceries as unwarranted relief to the middle class and the well-to-do, while “siphoning off” $600 million a year from state and local governments. That estimate has proved to be high. In 2006, more than a decade after the tax was lifted, the Department of Audits and Accounts puts the forgone revenues at $500 million. With the additional revenues generated, Richardson says 2 million payers of property tax would see their bills cut in half.
All noncommercial vehicles registered in individual names would pay no more property tax — except for a $20 tax, half of which would be used to help fund a $100 million statewide trauma network. Homeowners would get relief from school property taxes. The elderly in counties with an existing school tax exemption would get some relief from the tax for general government.
It’s a complex proposal, still, one potentially with major compliance problems and with unintended consequences. It is likely to be reported out of committee Thursday and reach the floor next week.
Democrats wisely elected not to introduce a sales tax on services. And now emboldened Republicans, sorting through the discards of the past, find this gem. There was a reason Democrats stayed in power for 134 years.
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