Voodoo plan says whacking 40% of Georgia’s revenue will make it grow
The fellow who wants to shrink government so he can drag it into a bathtub and drown it brought his homicidal plan to Georgia last week.
Grover Norquist, right-wing fiscal darling and tax slayer, laid out a very voodoo-sounding economic scheme to members of a state Senate panel, who seemed to like what they heard.
Remember, election year is right around the corner.
The plan is to slowly kill off the state’s income tax, which at $16 billion this year is about 43% of the state’s $37.8 billion budget.
Don’t worry, the cuts will open the financial floodgates, said Norquist. The more you cut taxes, the more revenue grows. It’s a mantra we’ve heard over and over again. And I suppose the more you hear it, the more people believe it.
The Senate Special Committee on Eliminating Georgia’s Income Tax met last week to explore the path to cutting ourselves to nirvana. The panel was constituted by Lt. Gov Burt Jones, who is running for governor and is using income tax cuts as a key part of his campaign.
That, and mentioning Donald Trump as often as he can.
For decades, Georgia’s income tax rate was 6% and has been whittled down in recent years and is scheduled to drop to 4.99% by 2029. That’s not good enough for Candidate Jones, who dreams of 0.00%.
Democratic state Sen. Nan Orrock pushed back at the idea that money will flow if you dry up such a vital tributary of the state’s financial stream, money that funds schools and roads and healthcare and other programs.
She noted the feds have been slashing spending, making the states carry more of the burden.
“How do you square reducing our state revenues with the needs we have as a state and the unknown needs that will happen with the enormous cuts coming,” she asked Norquist.
Orrock also noted that cutting the state income tax is “regressive,” meaning rich residents get a nice bump and low- and middle-income folks pay more.
Norquist has been waving off arguments like those since the special Senate committee’s chairman, Blake Tillery, was in training pants.
Norquist dismissed arguments about “regressive” taxes, saying they play to the politics of “envy” and are even sort of Marxian.
Cutting taxes brings prosperity, he opined.
“When you attract more people and more investment into the state, you end up with more tax revenue at lower rates,” he said.
Much of his verbiage concerned states with no income tax — Texas and Florida — and others like North Carolina and Iowa who are cutting theirs.
Norquist said North Carolina is raising more revenue with a lower state income tax rate (4.25%, down from 7.5%) and “in Iowa, they are raising more (revenue) at 3.8% than 8.6%.”
I went to Google and quickly found lots of nay-saying on his talking points.
The Des Moines Register carried a story, “Iowa revenues projected to drop by $500 million in each of next 2 years due to GOP tax cuts,”
“The more than $1 billion projected drop in revenue over two years is the result of Iowa’s new 3.8% flat tax,” it stated.
And the Bloomberg Tax report carried a story headlined, “North Carolina’s Tax Cuts Are a Warning, Not a Model for States.”
It said, “The tax cuts have enriched shareholders, executives and the wealthy few at the expense of children, young families, working people seeking to build wealth, and older people hoping to age in our communities safely.”
When did Karl Marx start writing for Bloomberg?
Another story I read was, “Nebraska lawmakers told easiest way to dig out of budget deficit is to ‘pause’ income tax cuts.” It was a rural GOP senator asking his tax-cutting comrades to slow down.
Like elsewhere, those of us in metro regions help foot the bill for the rustics.
There were similar stories from Louisiana and Mississippi. And Governing Magazine wrote, “Eliminating Income Taxes Would Be an Expensive Giveaway.”
And as to non-income tax states like Texas and Florida? Well, if you’re comparing them to Georgia, it’s peaches and navel oranges.
Texas has tax revenue from oil, oil, oil. Florida has tourists flocking to Disney World and 1,350 miles of coastline, contributing insane amounts of sales tax.
I called Sen. Tillery, a baby-faced lawyer who heads the income tax panel and is also the chair of the Senate Appropriations Committee.
That means he’s fully adept at keeping track of revenue coming in and expenditures going out. However, he is also running for lieutenant governor and knows tax-hating always does well in GOP primaries.
Tillery said that Georgia’s tax policy is larded with exemptions, especially in sales taxes. He noted that for every 1% in sales tax in Georgia, it brings in $2 billion. But every 1% in Tennessee brings in $3 billion, presumably because there are fewer exemptions.
“If you can hire a lobbyist, you can get a tax credit,” he told me.
The list for exemptions and credits includes things like food purchased for off-premise consumption ($1 billion), lottery tickets ($285 million), film production ($887 million) and breaks for energy and equipment used by manufacturers ($4.9 billion). The biggest are sales tax exemptions for services — everything from construction to health care to real estate to haircuts ($12.3 billion).
There’s a lot of potential untaxed revenue there. But close loopholes, like adding extra taxes for a plumber unclogging your drain or on retirement income, and people are still paying.
About the Author
Bill Torpy, who writes about metro Atlanta for The Atlanta Journal-Constitution, joined the newspaper in 1990.
