If you picture “tax” as being a four-letter word, it’s easier to understand the tempest that’s arisen in recent days over the perennial subject of tax reform in Georgia.
The latest peppery debate was triggered by the release of “Tax Shift Plans Threaten Georgia’s Future,” a report by The Georgia Budget and Policy Institute. It lays out scenarios threatening vastly higher taxes for the state’s poorer residents if a politically popular concept comes to pass in full measure. It calls for shifting away from a state income tax and toward a higher – and perhaps more-broadly applied – sales tax.
Free-market thinkers responded forcefully, arguing that GBPI’s scenarios and conclusions were misleading oversimplifications at best and disingenuous at worst. At the edges of GBPI’s arguments, critics may have a point. The same could also be said of the too-simplistic argument that cutting taxes further is the answer for most every economic ill, even in a low-tax state like ours. Georgia’s motto of “Wisdom, Justice and Moderation” provides a better roadmap, in our view.
That said, the back and forth thus far has made for a lively summertime discussion among those concerned with just how this state pays for cornerstone necessities. Things like cops, firefighters and schoolteachers.
We’re hopeful that the latest drama on both sides will help push Georgia toward an overdue destination – that of finally enacting a comprehensive, commonsense package of updates to a tax system that reflects needs of the early 1900’s moreso than those of the century we’re now living in.
Recent efforts toward tax reform can be best described as halting and piecemeal. Hemmed in by both a Great Recession that knocked the floor out from under tax revenues and a surge in voter anti-tax sentiment, it’s no surprise that lawmakers have had little stomach for a major revamp of Georgia’s tax code.
The latest GBPI report, though, reminds all that the issue hasn’t gone away — and won’t anytime soon.
Now, four months before the General Assembly is gaveled to order again, is not too early for lawmakers to resume honest conversations and research on how to smartly rework the state taxing apparatus.
What Georgia desperately needs in our view is an honest appraisal and discussion of a tax system that will keep us economically competitive while also raising necessary monies in as fair a fashion as possible.
Doing so requires much more than enacting an isolated tax credit here or exemption there. Collecting as low a rate of taxes as possible as broadly as possible would prove a better tactic toward achieving effective tax reform, we believe.
The Legislature took a big step toward this goal when it appointed the “2010 Special Council on Tax Reform and Fairness for Georgians.” Legislative action on the council’s far-ranging final plan fell apart in 2011 in a dispute over projected numbers and their net effect on taxpayers.
That meltdown led to more of the same in 2012: A package of several tax changes, touted as “reform,” was passed and signed into law. While not all bad, this assemblage came nowhere near creating a system necessary and sufficient to the state’s legitimate needs in the 21st century. The Economist aptly summed up the elusive end result: “Either way, reforming taxes requires instituting some while cutting others. The latter is easy. The former is not.”
This job is proving harder than it needs to be because of an emphasis on individual parts of tax reform – exemptions, for example — and not the whole package. Getting to an adequate solution requires seeing the big picture first. What sort of Georgia do we want? Find broad agreement on that and figuring out how to pay for it should become a less-taxing effort.
The tax council’s report explained our desired end game quite well: “We know that while corporate tax rates and tax credits are important to businesses interested in locating here, other economic factors have greater weight in the decision. These factors include quality of life, a trainable workforce, infrastructure such as roads, bridges and transportation … and quality of public K-12 schools.”
Keeping all that in mind would give lawmakers a sound basis from which to begin work toward achieving long-needed, wide-ranging tax reform next year.
