While Illinois was busy raising taxes, Georgia was busy finding ways to make the tax code simpler, fairer, more stable, and more competitive for the 21st century. On January 7, the Special Council on Tax Reform and Fairness for All Georgians released its final report of recommendations for reforming Georgia's antiquated, agriculture-based tax system. Sometime in the next few weeks, the legislature will act on the Council's recommendations. From NTU's perspective, there are some good recommendations but also some proposals that need attention.
As NTU stated in a letter to Georgia lawmakers, the positive recommendations include a proposal to reduce the personal and corporateincome tax rates. The report calls for the elimination of the current six taxbrackets and a substantial reduction in the personal income tax (from thecurrent highest marginal rate of 6 percent) over time. The Council envisions arate that does not exceed 4 percent in 2014, at which point the income taxchanges should (by the Council’s estimates) be revenue neutral. Additionally,the report calls for the corporate income tax rate to maintain parity with thepersonal income tax. As we said in our letter, "Flattening, simplifying, and reducing the income tax rateswill help spur investment, lead to more job growth, and provide more revenuestability."
But while NTU supports the income tax reductions, there are severalaspects of the Council’s report that we have concerns with. For example, we are concerned that the plan’srecommendation of an income tax rate higher than the revenue-neutral level of 4percent for several years after the plan’s adoption would lead to substantiallyhigher tax collections, an outcome that we cannot support because it is notfair for taxpayers. Furthermore,as we stated in the letter, the Council's call for "a flat communications service excise tax fails to take into account the uniqueaspects of how each service is delivered. Communications taxes differ becausethe communications technologies themselves differ in how they interact withpublic resources. Satellite television, for example, does not utilize publicrights of way, so imposing a 7 percent tax on over one million satellitetelevision subscribers in Georgia to pay for something they don’t use makes nosense. Additionally, theproposal to increase the cigarette tax is misguided because it candisproportionately harm the poor and small retailers without raising theprojected revenue. Such has been the case in numerous places, among them NewJersey and the District of Columbia."
Reforming the tax code to alleviate the burdens on taxpayers is a worthwhile pursuit. The best possible reform is one that remedies the distortive and burdensome aspects of a tax code, but remains revenue neutral. There are some questions about this tax code that the legislature can and should address in the weeks ahead. Georgians are counting on their lawmakers to build a better tax code for a stronger, more prosperous economy.