Dear Legislator:
On behalf
of the National Taxpayers Union’s (NTU’s) more than 8,200 members in Georgia, I
write to express support for recent proposals to reduce and flatten the state’s
income tax rates, but to also raise some concerns about the plan’s potential lack
of revenue neutrality at the beginning of implementation as well as proposals
to increase the cigarette tax and impose an excise tax on communication
services. These recommendations are contained in a report from the Special
Council on Tax Reform and Fairness for
All Georgians.
Several parts of the Special Council’s
blueprint would put Georgia on the path to a simpler, fairer, and pro-growth
tax system. Through painstaking research and numerous public hearings, the
Council learned how Georgia’s antiquated and distorted revenue-raising
structure has discouraged saving and investment, while giving the government
the ability to pick winners and losers. With these findings, the Council has
formulated several solid plans for reform that, if implemented, will benefit
the state.
Among the positive
recommendations is a proposal to reduce the personal and corporate income tax
rates. The report calls for the elimination of the current six tax brackets and
a substantial reduction in the personal income tax (from the current highest
marginal rate of 6 percent) over time. The Council envisions a rate that does
not exceed 4 percent in 2014, at which point the income tax changes should (by
the Council’s estimates) be revenue neutral. Additionally, the report calls for
the corporate income tax rate to maintain parity with the personal income tax.
Flattening, simplifying, and reducing the income tax rates will help spur
investment, lead to more job growth, and provide more revenue stability.
Although NTU supports the income tax reductions, there are several
aspects of the Council’s report that, in our view, are problematic for
taxpayers. We are concerned that the plan’s
recommendation of an income tax rate higher than the revenue-neutral level of 4
percent for several years after the plan’s adoption would lead to substantially
higher tax collections, an outcome that we cannot support because it is not
fair for taxpayers. Furthermore,
a flat communications service excise tax fails to take into account the unique
aspects of how each service is delivered. Communications taxes differ because
the communications technologies themselves differ in how they interact with
public resources. Satellite television, for example, does not utilize public
rights of way, so imposing a 7 percent tax on over one million satellite
television subscribers in Georgia to pay for something they don’t use makes no
sense. Additionally, the
proposal to increase the cigarette tax is misguided because it can
disproportionately harm the poor and small retailers without raising the
projected revenue. Such has been the case in numerous places, among them New
Jersey and the District of Columbia.
Georgians are counting on their
elected officials to remove obstacles to an economic recovery, and burdensome
taxes are among the most daunting of them. A tax reform plan should work to stabilize revenue and reduce the
overall tax bite, not increase it. While NTU
would gladly support a tax simplification bill that does not add to existing
burdens, we simply cannot support an approach that leads to heavier tax
loads on hard-working Georgians. Therefore, our members urge you to pursue
changes that make the plan revenue neutral, including scrapping the
communications and cigarette tax proposals.
Sincerely,
John Stephenson
State Government Affairs Manager
Cc: Governor Nathan Deal
PDF
Letter
