New council could make big changes in taxes

AJC:

Legislators have long complained that the tax code -- which includes hundreds of exemptions for special interests -- was written decades ago for an economy that relied heavily on agriculture and manufacturing. Those remain important sectors of the economy, but Georgia also has seen huge growth in service industries.

Several gubernatorial candidates have called for the state to look at the sales tax exemptions on everything from sod and church bells to crab bait and aircraft parts to figure out which ones should stay in place.

Lawmakers have talked of removing the exemption on all groceries and broadening the sales tax to include more goods and services. Some Republican leaders say the extra money raised would let them cut personal and corporate income taxes, which in turn would help Georgia better compete with states like Florida that don't have a personal income tax.

House Speaker David Ralston (R-Blue Ridge) said he doesn't want to prejudge the council and say specifically what tax changes are needed. But the long-term view, he said, is to create a more modern tax system that helps create more jobs. And whatever is passed, he said, shouldn't increase taxes overall.

"The ultimate goal is to make job creation and job maintenance a priority in this state," he said.

The makeup of the group has raised some concerns. State Rep. Stacey Abrams (D-Atlanta), a member of the committee that approved the creation of the council, said it lacks both racial diversity and consumer interests.

The legislation creating the council named four economists, representatives of two business lobbying organizations, Gov. Sonny Perdue and two appointees each from Ralston and Lt. Gov. Casey Cagle to serve on the council.

Abrams called taxes a "zero sum" game, so that if one group gets a tax break, others have to pay more.

"What we often do in the Legislature is focus singularly on the business climate without focusing on the consumers who make the businesses work," Abrams said. "It doesn't matter if you have a good business climate if you don't have anyone who can afford to buy the products."

Ralston said the council is made up of people who have a track record of knowing how to create jobs. And with unemployment above 10 percent in Atlanta, tax policies that create jobs are vital, he said.

"These are big-picture people. They are going to take a big-picture view of things," Ralston said. "I don't know how anyone can quarrel with the idea that if we create a climate where it is good to do business in Georgia, that's good for everybody."

Sarah Beth Gehl, tax policy expert at the Georgia Budget and Policy Institute think tank, said the effect of the tax system on economic development should be only one of the areas studied by the council.

"Hopefully the council members will consider the tax system from all perspectives, including how it affects low- and moderate-income Georgians and its effect on funding for essential services," she said. "This shouldn't be an exercise in who can protect their special-interest tax break or carve out a new one."

Who gets tax exemptions, and who gets to keep the ones that are already on the books, will be part of the discussion and will guarantee full employment for Statehouse lobbyists.

For some on the council, tax breaks for businesses aren’t a theoretical debate. One of the council members, D.E. "Skeeter" McCorkle, president of McCorkle Nurseries, is in a business that has received tax breaks from lawmakers in the past 20 years.

Agriculture exemptions, which have piled up the past two decades, are among those that will be looked at by the council.

One of the people who will keep a close eye on the council is former longtime state Rep. Richard Royal, the author of many of those exemptions. He is lobbying for many of the top agriculture interests, as well as cities, counties, school boards and the mining industry.

Royal said of the exemptions, "I don't ever remember passing one that wasn't justified at the time."

Its important to note that big business has a seat at the table but I don't see anyone that understands what working families face in their day to day lives.  Working families already pay a higher percentage of their income in taxes than do others up the income ladder. 

 

Something tells me you won't see policy recommendations that put a priority on tax policy that will incentivize the kind of economy that expands upwards rather than trickles down.  Seeing as how we have an aggregate demand problem that might be useful--when consumers can't afford to buy goods and services, invest in their future, and face a tax burden that falls disproportionately on them; we all lose.

Posted via email from Jim Nichols for Senate Blog