Tax plan passes General Assembly

The bill has changed considerably since it was first introduced a year ago as a truly comprehensive reset of the way the state taxes individuals, families and businesses. The 2011 tax bill, which was shelved in the final days of that year's session, would have cut the personal income tax rate, done away with many deductions and added sales taxes on services and many goods.

Tax Overhaul 2.0, however, lacks the sweep of the first version, while targeting cuts to manufacturers, airlines and married couples, and eliminating the much-hated car tax paid on motorists' birthday.

Even this bill's supporters said that while it delivers meaningful improvements to the tax code, it's not perfect and not enough.

"It's not as comprehensive as I thought it might be, but it is a good package," said Sen. Bill Heath, R-Bremen, who carried the plan in the Senate. "It is pro-jobs. It is pro-families. You can go home after today and be proud of voting for it this session."

According to Heath, the plan represents a savings from state and local taxes of $262 million over the next three years. But independent analysts worry that it will be years before the full impact of the bill is known, while some lawmakers privately noted that official projections show the bill causing state revenue to increase by the third year.

In an analysis published Wednesday, the president of the free-market Georgia Public Policy Foundation said the bill is a mixed bag.

"The proposal includes at least one solid pro-growth proposal that our economy desperately needs," Kelly McCutchen said, referring to the energy tax exemption. "There are certainly pieces of the bill we would eliminate, but the good outweighs the bad. The worst part of the bill is not what is in it, but what isn’t. Opportunities to enact comprehensive tax reform are few and far between. Let’s hope we haven’t allowed our window of opportunity to shut."

Heath told reporters there is more to be done to improve the state's tax climate.

"We should have focused on cutting Georgia's income tax rate," he said. "That's what Georgia needs. But it's very complicated, and we had all these moving pieces going on. This is where we ended up."

The bill was drawn from a larger set of recommendations unveiled in January 2011 by the Special Council on Tax Reform and Fairness. Council Chairman A.D. Frazier said the bill lawmakers approved includes many key components of last year’s bill.

“But a lot of the controversial things didn't make the cut,” he said.

Expanding the state sales tax to groceries and services, increasing the cigarette tax, and changing the formula for how the state taxes gasoline were among the tougher measures proposed last year that did not make the cut this time. But Frazier said the Legislature accomplished much.

“I give them credit for taking it on and making a darn good first step,” he said.

Of particular importance is the tax exemption for energy consumption, which the tax council had stressed as key, he said.

“We’re just not competitive unless you take that energy tax off,” Frazier said, adding that he wished the tax could be eliminated now rather than phased in.

Deal said the energy tax was problematic when recruiting new business to the state. In discussions with Caterpillar, which recently announced a major new plant in Georgia, "it was an issue they were concerned about," Deal said.

The governor assured the company that he and lawmakers were serious about addressing it, Deal said.

"We could not make an absolute promise, but they knew the Legislature was moving forward," he said.

Deal had worked with the GOP-led leadership in the General Assembly since last year on making changes to Georgia's tax code.

Still, some lawmakers and activists this week said the package should have been introduced earlier this legislative session to give everyone more time to consider the bill's effect.

Julianne Thompson, an organizer with the Atlanta Tea Party Patriots, said her group remains disappointed that the bill was introduced Monday, voted out of the House on Tuesday and given final approval two days later.

"We still believe there was not enough openness to the process," Thompson said, noting that there are parts of the bill the group likes. "It was too much of a last-minute thing."

Although he voted for the bill, Senate Minority Leader Steve Henson, D-Tucker, tried to temper expectations. "This change will not be the dramatic change for a low-tax state," Henson said, adding that the manufacturing taxes eliminated by the bill were already among the lowest in the nation. "I just don't want people to believe this will be solving all our problems."

Still, Senate President Pro Tem Tommie Williams, R-Lyons, praised the support the bill received from both sides of the aisle.

"I'd like to thank the Democrats who came to the table on a bipartisan bill," he said.

Tax plan gains passage

The Georgia Senate voted unanimously Thursday for a sweeping tax plan that its supporters said would help the state compete for jobs and help families. The bill now awaits the signature of Gov. Nathan Deal, who helped put the plan together. Here are the key elements of House Bill 386: