A new report by the Georgia Budget and Policy Institute (GBPI), Advancing Georgia's 1930s Tax System to the Modern Day, puts forth recommendations for tax reform that will help the state raise enough money to meet its growing needs, bring the revenue system in line with the 21st century economy, and improve fairness if adopted.

The report was delivered to the 11 members of the 2010 Special Council on Tax Reform and Fairness for Georgians who met for a second time this week.  The Council is charged with providing recommendations to the state legislature in January 2011 when the General Assembly meets to amend the fiscal year 2011 budget and create the FY 2012 budget.  The GBPI provides the Tax Council with a set of reform recommendations including:

- Lowering the state sales tax rate and simultaneously broadening the tax base to mirror 21st century spending habits.
- Modernizing income tax brackets, rates, and standard deductions to better reflect current income levels.
- Creating an earned income tax credit (EITC) to offset the highly regressive sales taxes for the state's lowest earners.
- Scaling down tax preferences, both for individuals and corporations, to avoid shifting taxes onto fewer individuals and businesses as they do now.
- Closing corporate loopholes and updating the corporate net worth tax to prevent profitable corporations from avoiding paying their fair share.
- Updating cigarette and motor fuel excise tax rates.

Using data from the Institute on Taxation and Economic Policy's Microsimulation Tax Model, the report provides beginning revenue estimates and distributions among income groups to demonstrate how recommended combined tax reforms would improve fairness while also enhancing adequacy. An overview of similar actions taken by other states, as well as potential federal tax changes, are also included in the report.
 
As the Tax Council members embark on numerous “fact-finding” sessions across the state later this month, they should start by giving the GBPI report a serious look.

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