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Friday, January 30, 2009
Taxes require a goal besides spending them
The Atlanta Journal-Constitution
Levying a sales tax on food could be OK with me. So, too, could a legislative decision to take back the property tax relief grants that save homeowners $200 to $300 per year.
They were gimmicks that served the temporary purpose of making an incumbent governor (Zell Miller and Roy Barnes) look good, same as the $100 gift cards for school supplies that Gov. Sonny Perdue begat. They’re not particularly useful tax policy. They don’t entice individuals to do anything that serves the common good that they wouldn’t do otherwise.
They’re gimmicks that have a single, overriding virtue. They keep politicians from spending two sums: $428 million per year, the amount returned to homeowners in property tax relief; and almost $1 billion, the amount that would otherwise be collected on food. You spend it. They don’t. Without compelling arguments to the contrary, that’s reason enough to preserve both. They discipline the undisciplined.
Legislation now before the General Assembly would make the grants conditional. You’d get them when state revenues grow “by 3 percent plus the percent change in the rate of economic inflation on individual taxpayers as determined under the Consumer Price Index for all urban consumers.”
Here I stumble.
Legislators have declined to accept for themselves and their heirs any spending cap, no matter how elastic. A version of a proposed constitutional amendment offered by state Sen. Chip Rogers (R-Woodstock), now Senate majority leader, did pass that chamber, but it never got to the floor of the House. It would have held state spending to that of any previous year plus growth in the state’s population and the rate of state government inflation.
There was nothing draconian about it. It was really just a disciplining tool that, with considerable flexibility, accepted for themselves what they may be about to ask voters to apply to local governments with a 3 percent cap on assessments.
Rather than relying on assessment creep to generate higher revenues, county commissioners would have to take an actual, before-the-cameras vote to increase the millage. That’s truth in governing. Commendable. But what’s good for locals should be good for state officials, too.
On Friday, the House did vote 117-55 to make the $428 million in grants conditional after July 1. Based on current economic conditions, they’d not be funded next year or probably the year after. Or maybe never more after the cycle is broken, since they’re discretionary. As noted by the bill’s sponsor, state Rep. Larry O’Neal (R-Bonaire), revenue increases since 1999 would not have reached that threshold in 2002 and 2003.
The grants are popular, but legislators argue that the grants promote overspending by the locals who add $200 to $300 per homeowner into their budgets knowing that the state will pick up the tab. The state really has no obligation to provide the grants, except that it collects one-quarter of one mill in property taxes from every county — something that it should stop immediately.
The only reason for continuing it is that it allowed a once-powerful political group — local tax commissioners and their staffs — to join the State Employees Retirement System when other local employees couldn’t. The logic was that the quarter-mill made them agents of the state.
They now can collect benefits from the state and from counties for the same day of work. State Revenue Commissioner Bart Graham told budget-writers last month that some retired commissioners draw $13,000 per month just from the state’s system, plus additional unknown sums from local systems.
Conservatives do need to sit down and decide what they want tax policy to achieve or to encourage — and then design the system to do it. Want to draw new business to Georgia? Eliminate the corporate income tax. Want to spread the burden to those who are not paying income tax? Raise the sales tax and exempt working people from paying income tax on the first $50,000 of earnings.
The trick here is not to turn for guidance to those in the bureaucracy, in academia and in advocacy organizations who believe that ease of collecting lots of revenue is the top priority. If the expert’s first recommendation is to extend the sales tax to services, fire him and move on.
It’s OK by me to return a sales tax to groceries. It’s OK, too, to stiff us homeowners. But come with something else that achieves some desirable purpose. Don’t just take our money to spend it with no end purpose or discipline.
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