Income tax cuts are great. The tough part is deciding who will pay for them.
The most central campaign platform of the impending governor’s race centers around taxes. If you pay attention to campaign advertising during the local races, every candidate talks about the rise in cost of living. Most successful candidates will talk about tax reduction.
That campaign literature is not an accident; it is meeting people where they are. It is a game of connecting dots.
I do not intend to talk down to voters; they are the ones who make the rules. But here is an interesting fact about your local governments: Each city and county in the state of Georgia must have a balanced budget.
They can run a deficit occasionally, but they must collectively atone for it over time. Even the Fulton County Commission knows the sensitivity of raising taxes — after a public and hard-fought battle, four Democrats and two Republicans voted to keep their millage rate the same. It is an election year after all. Raising taxes is bad business, even for Fulton County Commissioner Marvin Arrington Jr.
Unlike Georgia, Texas and Florida do not have a state income tax
Twenty-three states have a Republican-elected governor and a Republican-controlled legislature. They all have balanced budgets, but several of them also have no state income taxes.
That means the state collects no money out of your paycheck. Texas and Florida are large states with thriving business economies that Georgia loves to compare itself to. They are also quite different places. Florida thrives from tourism, and Texas is one of the leading energy producers in the world. Simply put, Georgia is not either of those things.
I am incredibly supportive of Georgia eliminating the income tax. Georgia is growing. America’s states offer a meritocracy platform, and plagiarism is a compliment. But how do you replace tens of billions of dollars?
In 1973, Louisiana U.S. Sen. Russell B. Long said in a Money story, “Don’t tax you, and don’t tax me, tax that fellow behind the tree.” Well, who is behind Georgia’s proverbial tree? That is the hard question that nobody wants to answer, so I will offer a few suggestions.
Three ideas to raise revenue to replace the income tax
More than 17% of Delta Air Lines passengers take off or land in Atlanta. I would not punitively punish somebody who lived in Georgia or wanted to visit as a destination; but if you are here on a layover, that is the first place I would look.
Delta has a team of very high-powered lobbyists who will threaten to leave or reroute, but the partnership between Atlanta, Fulton County, Clayton County and the state of Georgia is deep. Twelve percent of all travel is business related; those companies write off airfare at 100%.
If Georgia made me a governor for a day, and you forced me to raise taxes somewhere, I would always look at corporate money first based on the IRS tax structure.
The second place I would look is in South Georgia on I-75 and I-95. How much traffic is generated along the interstates with people passing through? I would take Florida’s model of toll roads on a much smaller scale, and I would capture that traffic right as it comes across the state line heading north. This would raise the infrastructure dollars for road and bridge replacement in a state that could use an uplift.
The third is Georgia’s hotel occupancy taxes. Georgia is the capital of the Southeast. If people come here and spend time here that is another way to reduce the impact on your quality of life.
Talk is cheap. Tough decisions must be made.
But here is what I want you to understand: Until your leaders engage in the conversation about revenues, eliminating the state income tax is not a reality.
Georgia’s next governor, lieutenant governor and speaker of the House must agree on the next steps. I am grateful in the last eight years the tax rate has gone from 6% to 5.19%. Our leaders are being methodical. I give credit to Lt. Gov. Burt Jones for being brave and putting the big idea out there, and he is winning.
Georgia has nibbled around the edges to reduce the state income tax. If we are going to eliminate it, hard decisions must be made — and the state is not currently even having hard conversations. Cutting spending is one thing, but you cannot entirely cut your way to prosperity.
So where will the dollars come from? It is a great election question that none of the candidates have answered. If corporate giveaways continue, then somebody else is going to pay. Who will it be? It sounds impressive to say you want to eliminate the state income tax. A decade into the effort, I am grateful for my 0.8-percentage point reduction.
Ben Burnett is a business owner and former member of the Alpharetta City Council. He is a Republican and a regular contributor to the AJC.
