Taxpayers who hoped the General Assembly was working to cut their state income taxes may have seen the best opportunity for that happening pass.
Lawmakers had expected an overhaul of the state’s tax system — which cut some taxes and raised others — would reduce taxes overall for most Georgians. But last-minute questions about the accuracy of the data used to draw up the new tax plan caused GOP leaders to shelve the plan for this legislative session, which ends this week.
They could take another stab at it during this summer’s special redistricting session — or later — but some legislators and other observers believe the tax plan is unlikely to pass then.
The proposal has led a troubled life so far, as Republicans and Democrats raised serious questions about what, exactly, the plan would mean to their constituents. While GOP leaders promised to deliver a tax cut to nearly every Georgian, Democrats used Republicans’ own data to claim otherwise.
“There were still a lot of questions,” said Rep. Charlice Byrd, R-Woodstock. “There were a few winners and a whole bunch of losers.”
The delay, which House Speaker David Ralston announced Monday, was fine with many rank-and-file Republicans who expressed their distrust of both the plan and its promises to lower taxes for every Georgia taxpayer.
“I was relieved, but I was prepared to vote,” Byrd said. That vote would have been “no.”
The legislation’s ancestor was a report released in January by the Special Council on Tax Reform and Fairness, which recommended a broad range of changes to the state’s tax system, including lowering income tax rates and relying more heavily on sales taxes.
GOP lawmakers chopped away at the recommendations for weeks before unveiling a bill to lower the personal income tax rate from 6 percent to 4.5 percent, charge sales tax on auto maintenance services and create a 7 percent “flat tax” on communication services. The bill also included some business-friendly tax exemptions, including a break on energy consumed in manufacturing, that had broad bipartisan support.
Republican leaders scuttled the first attempt to move the plan forward when House Minority Leader Stacey Abrams, D-Atlanta, produced a spreadsheet showing the changes would boost income taxes for most of the middle class.
Republicans reworked the legislation for a week behind closed doors but abandoned the effort Monday without a vote. University of Georgia political science professor Charles Bullock said the plan’s next best opportunity for a vote will be during a special legislative session on redistricting this summer.
Redistricting sessions generally involve a small number of lawmakers poring over district maps while the bulk of legislators wait to vote. Bullock said that leaves plenty of time for a tax overhaul.
Abrams said the governor and lawmakers would be wise to avoid such a difficult issue during redistricting talks.
“That’s the most political time for this body, and I think it would create unfair pressure on people to make decisions that are not in the best interests of their constituents,” she said.
Gov. Nathan Deal, who chooses what will be considered in a special session, has not decided whether to include the tax revamp as part of a summer session. Spokesman Brian Robinson said Deal may know more after the state’s fiscal year ends June 30.
Regardless of timing, Bullock said Abrams’ revelations appear to have shaken the confidence many lawmakers have in what they are being told.
Byrd said she would have to be convinced the plan really did not raise taxes.
“If it hasn’t changed dramatically, for me to give a really positive message to my constituents, I can easily vote no,” she said.
Conservative groups such as the Georgia Tea Party Patriots continue to view the plan with a wary eye. Debbie Dooley, state coordinator for the group, said it took no position on the latest version of the bill because there was no time to review it in detail.
“I do credit Speaker Ralston for pulling the bill until they had more information,” she said. “But they are going to have to come back with something that doesn’t hit the middle class.”
Rep. Calvin Hill, R-Canton, said he has no confidence in what the plan would mean to average Georgians, and like many on the GOP side, he blamed the Georgia State University Fiscal Research Center, which produced a series of projections based on the tax proposal package.
“Every time we have had something from that group, with all due respect, we’ve never gotten out the same numbers,” Hill said.
The center produces the fiscal notes for all legislation passing through the General Assembly. David Sjoquist, director of the center, admitted mistakes were made in preparing projections on the effects of the proposed tax changes, but he said the plan presented some specific challenges because the requests from lawmakers were complex and required a quick turnaround.
Sjoquist said another problem is that the center is using 2005 state tax data and projecting the results seven years into the future. The center has been blocked from obtaining new data because of privacy concerns, he said.
Hill said he will not even consider a plan developed from those numbers.
“Everything is an extrapolation,” he said. “How can it be accurate?”
Abrams defended the center’s work. She said the problem was Republicans based their assumptions on the best-case scenario and she did not.
“I always used the exact same model that they had,” she said. “I just asked different questions.”
Hill said the plan needs to be reworked using an “independent” source, a possibility Ralston also raised. But that will take time and could push the process into next year’s session, when every legislator will be up for re-election.
“There’s this notion that you can never pass a tax bill in an election year,” Bullock said. “They would be afraid of having to run against an opponent who could say, ‘You raised our taxes.’ ”
Abrams said, “I think if what you are doing is the right thing to do, you should be able to withstand the public scrutiny.”
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