Drive to cut state income tax a bad bet for regular folks
Let’s start with this: The Senate Special Committee on Eliminating Georgia’s Income Tax might as well be called the Special Committee to Help Our Ambitious Senators.
That is, four of those sitting on this new committee are running in next year’s race to be lieutenant governor. Also, current Lt. Gov. Burt Jones, the fellow pushing this publicity stunt, is hoping it helps his run for governor.
The idea of ditching the state’s income tax, which is now 5.19%, sounds great at first thought. I mean, who likes giving the state a nickel out of every buck they make? (Actually, most people pay about 3 cents per dollar. But still, who likes paying anything?)
The committee aims to do just what it says, eliminate the tax that funds more than 40% of the state’s operating expenses. The personal income tax brings in about $16 billion a year. The state’s budget is $37.7 billion.
That leads to the question: If I cut my salary almost in half, how would I buy groceries and still watch Netflix?
Don’t worry, says state Sen. Blake Tillery, a Republican from Vidalia who chairs the special committee. There’s plenty of “corporate welfare,” he says, that has been doled out by the legislature over the decades to special interests. That largess can be reeled in to fill any perceived funding gap.
In fact, he has repeatedly said there is $30 billion not being paid to the state in a vast array of tax exemptions and credits. That “welfare” runs the gamut of massive sales tax breaks to manufacturers, health care entities and home builders, as well as to people buying groceries with food stamps, lottery tickets or prosthetic devices.
He has vowed not to touch the $1 billion in sales tax that Georgians are not paying for groceries.
“It’s not a question of if we go to zero, it’s when and how,” Tillery said this week.
To be fair to Tillery’s competition for Lite Guv, senators Greg Dolezal, John F. Kennedy and Steve Gooch are also in that race. They also sit on the committee, where they continually nod their heads in agreement as to how great this plan is.
They’ve had lots to nod along to.
The tax-killin’ committee has met four times since August and has brought in about a dozen “experts” and a cadre of carefully curated regular folks. A meeting last month in a Gainesville eatery brought in a retired fireman, a working mom, a bartender, a small-business owner and the town’s police chief.
All want the income tax gone, gone, gone.
The traveling dog-and-pony show was kicked off in August by Grover Norquist, the famous tax-hating activist who once said he wants to shrink government so small he could drown it in a bathtub. And it finished the other day with a Zoom visit from Arthur Laffer, another tax fighter whose been around since the Reagan Administration.
There have also been speakers from Tennessee, Florida and Iowa, states that have no income tax or are headed in that direction.
(In August, I checked on income tax-cutting states that Georgia wants to follow, like Iowa, Nebraska, Louisiana and Mississippi. All have had budget crunches or have had to cut programs.)
The senate panel has employed a time-honored political strategy: If you really want to “study” something, have a parade of like-minded experts come in and tell you what you already want to hear.
One person not invited to the party is Daniel Kanso, from the Georgia Budget and Policy Institute. This week, he released a report entitled: “Breaking the Bank: Eliminating the state income tax harms most Georgians and increases the cost of living.”
In his study, Kanso gets right to the point: “Eliminating Georgia’s income tax would represent the largest transfer of wealth from working and middle-class families to high income individuals and corporations in state history.”
Ah, the old poor-get-poorer tale.
Kanso wrote that to replace income tax money, Georgia would have to raise it’s 4% state sales tax to 12%. Remember, the money’s got to come from somewhere. And that’s before the city, county SPLOST and MARTA taxes are considered.
Tillery derided Kanso’s figuring as “third-grade math,” because he believes the state can make up the lost revenue by eliminating billions of dollars of tax breaks for corporations and special interests.
Tillery has not tipped his hand as to where the new money will come from to replace income tax revenue, if it is eliminated
As I noted above, sales tax breaks to manufacturers, health care and home builders account for about $11 billion. But add those sales taxes back in to those industries and the public will no doubt pay dearly on the other side.
Worse, Kanso says, is that this scheme is of no benefit to most Georgians.
“It will make our tax system less fair and most people will pay more,” he told me.
His report says about 80% of households — about 3.9 million filers who make up to $153,000 a year — “would experience comparably large tax increases, reducing their take-home earnings.” He figures that to be almost $1,000 per year household.
Kanso said he has asked to present his findings before the committee but has had no response.
No wonder.
Also, the plan would do no favors to seniors, many who are already paying no or little state income tax. So how would income tax elimination help them?
It wouldn’t. They would increasingly have to foot the bill.
That’s third-grade math.
About the Author
Bill Torpy, who writes about metro Atlanta for The Atlanta Journal-Constitution, joined the newspaper in 1990.
