In Georgia, the radical plan to abolish property taxes and hike sales taxes, proposed earlier this fall by House Speaker Glenn Richardson, is shrinking by the day. Last week, Richardson pared back his proposal so that instead of repealing all property taxes, the plan would "only" repeal all homeowner property taxes for schools (plus the annual "car tax" Georgians pay on their motor vehicles), and would pay for the change by taxing personal services.
The plan still raises worrisome questions, however. Georgia already allows large state-funded (and local-option) homestead exemptions and other tax breaks for fixed-income families. If further residential property tax relief is necessary, a state-funded "circuit breaker" tax credit would be a better-targeted (and less expensive) option than outright repeal of all homeowner school property taxes. (Circuit breakers are provisions that prevent property taxes from exceeding a certain percentage of a family's income.) And expanding the sales tax base to include services, while a shot in the arm for a sustainable sales tax, would make Georgia taxes even more regressive unless accompanied by low-income tax breaks of some kind. As the Georgia Budget and Policy Institute has pointed out, a state Earned Income Tax Credit could be an important part of this mix.