Georgia Begins Tax Reform Discussions

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Georgia is the latest state to formally join the tax reform debate with the creation of the Special Council on Tax Reform and Fairness.  The 11-member Council, which met for the first time this week, has been charged with conducting  a comprehensive study of the current state and local tax system and must offer a set of final recommendations for modernizing the system to state lawmakers by January for an up or down vote.

The goals of the Council are still a bit vague, but by all accounts it is certain the members will pay special attention to closing loopholes, expanding sales taxes to services, restoring the sales tax on groceries, and lowering personal and corporate income taxes.  The Council’s Chairman, A.D. Frazier, announced this week that the members plan to seek input from constituents and stakeholders through a series of statewide meetings and will accept comments via the Council’s website.

Georgia’s House Speaker, David Ralston, who is not on the Council, asked members this week to create a tax system that is “more stable, more fair, more flat, and more job-friendly.”  

The Council should be concerned with increasing stability, fairness, and jobs, but flattening the tax system, particularly the personal income tax, has nothing to do with those goals.   ITEP’s 2009 report, Who Pays?, found that the poorest Georgia families pay an average of 11.4 percent of their income in Georgia taxes, twice as high as the 5.7 percent of income that the very best-off 1 percent of Georgians must pay.  While this upside-down pattern is common in state tax systems, Georgia is somewhat more unfair than the typical state due to its relatively flat income tax structure and reliance on the sales tax. And, as ITEP has already noted, legislation enacted this year would only make this worse.

The Georgia Budget and Policy Institute (GBPI) and ITEP will be monitoring the Council meetings throughout the summer and fall.  When asked about the direction the Council should follow, GBPI’s Deputy Director Sarah Beth Gehl, said she hopes “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.  This shouldn't be an exercise in who can protect their special-interest tax break or carve out a new one."

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