Tax Reform and our General Assembly

HB386, the "tax reform" bill has had inadequate study and inadequate public promotion and does irreparable harm to our trust in government.

As a perpetual optimist, I keep expecting the people we vote for to adhere to the values and positions they take during the campaign once they get elected, and to do the right thing for us when they go to the legislature.

It seems I am perpetually disappointed.

The legislature's behavior, led by supposedly "conservative" legislators and our "conservative" governor have exhibited behavior that would embarrass Nancy Pelosi.  The "tax reform" bill, HB386, is a mishmash of items that have had insufficient study, and in the end will have unpredictable results.  It was posted, voted on and will be passed in three days. 

To quote the AJC "The pace was deliberate — legislators learned last year that introducing a tax overhaul measure earlier in the session is an invitation for opponents to pick it apart."

While I can comprehend the discomfort that opposition poses for our legislators, if they can't support and sustain the terms of the bill in the face of opposition, perhaps the terms aren't as good as they seem. That certainly doesn't seem like an excuse to short-circuit study and debate and cram something down this fast.  This bill has inadequate study, inadequate promotion to the public, and does irreparable harm to our trust in government.

See the bill here, the House vote here and the Senate vote here.

As with the TIA-TSPLOST bill, I say to our legislators: we can do better than this.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

SOGTP March 26, 2012 at 03:13 PM
I agree Mike - It does nothing to restructure marginal tax rates. The state legislature mostly the leadership is out of control. The rank and file members seem unwilling to slow them down.
Frank Jones March 26, 2012 at 05:59 PM
HB 386 was, to borrow a phrase, "Rammed down our throats" by the legislature without due adequate review and public comments. If you read the bill, it's obvious that this was not any sort of "tax reform" but corporate welfare. For instance, 1. Vehicle title fees (14 pages) - The new and used car dealers have lobbied for this change for years. What they've been wanting is for private-party used vehicle transactions to be subject to sales taxes under the guise that dealers are "disadvantaged". They tried it last year and it failed as sales taxes only apply to purchases made from dealers/retailers. So they changed the tax to a fee and made it applicable on all vehicle registrations. Currently, the bill does away with ad valorem taxes so if you typically purchase vehicles from a dealership, your overall tax burden will go down. If instead, you typically purchased vehicles from individuals, your tax burden will go up dramatically. And I state "currently" because, I suspect that the legislature will re-introduce ad valorem taxes on automobiles within 2 years in order to generate additional revenue. 2. "Amazon"/Internet Sales Tax - this part will assess sales taxes on internet transactions that take place on GA based websites. The idea is to protect GA retailers who are at an economic disadvantage to online retailers. Nexus rules and sales tax in general do put local retailers at an economic disadvantage with online stores, but only because consumers (cont)
Frank Jones March 26, 2012 at 06:13 PM
disagree with sales taxes in general. A better approach would be to eliminate sales taxes which are regressive and tax the poor/middle class disproportionately and institute a fairer but slightly higher income tax rate. But that's another argument. So what will happen with the "internet" tax? Any company that only has nexus via their website will move their website (and the related jobs) from Georgia and in favor of another state. This is a job-killing bill passed by our Republican-led legislature! 3. Sales Tax Exemptions for Manufaturers/Power Production/Agri-Business - they lobbied hard for this and got it. Now, let's see if their savings will trickle-down to us! I don't think so! 4. Senior Retirement Exemption - Senior citizens aged 62 and 65 will be able to avoid paying income taxes on the first $35,000 and $65,000 of their retirement income ($70,000 and $130,000 if married filing jointly). Here's the rub...The seniors didn't pay tax on this income when they earned it and now they don't have to pay tax when they receive it. This bill essentially guarantees that only a few senior citizens will pay income taxes and live tax free while working stiffs making significantly less and trying to raise a family will pay income taxes. Can you say "vote-buying"? "Our" representatives don't support the people, they support big business and lobbyists. Politics at its grandest!
Scott March 27, 2012 at 07:07 PM
A big thanks to Chip Rogers. Thanks for cutting taxes for your buddies. Meanwhile the local schools will need to increase class sizes and furlough days even more...
SOGTP March 28, 2012 at 11:20 AM
Frank - Doesn't Nathan Deal operate a titling business sole source uncompeted by the state?
SOGTP March 28, 2012 at 11:22 AM
Frank - the leadership told us that the big box stores were competing in a unleveled business field. They blame the entrepreneurs of the INTERNET for this. Really I think gub'mint created the unlevel playing field with excessive taxes on businesses.
Jake Lilley March 28, 2012 at 02:30 PM
Call Governor Deal and ask him to VETO HB386 – Tax Reform Bill Governor Deal's contact information: Email: To email the governor, use this link http://gov.georgia.gov/00/gov/contact_us/0,2657,165937316_166563415,00.html Phone: 404-656-1776 Fax: 404-657-7332
Frank Jones March 28, 2012 at 04:51 PM
@Bill...If my memory recalls correctly, Gov. Deal tried to intervene when the state was going to eliminate his virtual monopoly relating to a salvage vehicle inspection business. His company charged individuals & businesses a fee for bringing their salvaged vehicles to his business where they were inspected to determine if they could be deemed safe and title-worthy. I don't believe that his company did the actual inspection, but only provided a location for state inspectors to do the inspections. His intervention, rebuke from Republican & Democrat house members and possible censure from the House was the reason his resigned. He appears to be as corrupt as they come, with the exception of Tom Graves and Chip Rogers.
Frank Jones March 28, 2012 at 05:07 PM
@Bill...I can't tell if you support HB 386 or are against it. Yes, our "leadership" has told us that Georgia retailers and big box stores are at a competitive disadvantage from internet entreprenuers. The competitive disadvantage that they're trying to level with the "Amazon" tax, is strictly sales tax. This tax isn't a tax on the big box stores, it's a tax on individuals (consumers). Consumers pay this tax and have voted through their actions that they don't support sales taxes. Sales taxes are a 20th century tax in a 21st century economy. Unlike what they tell us, businesses are not overtaxed in Georgia! Corporate tax rates are 6% and when you factor in the fact that businesses receive roughly a 33% reduction of their state income taxes since they're deductible on the federal returns, businesses actually pay an effective 4% state income tax. And that doesn't even take into account that businesses get Section 179 and Bonus Depreciation deductions for asset purchases, in addition to other tax credits/incentives. Many businesses make hundreds of thousands yet pay $0 in taxes! I worked for a multi-billion holding company buying/building subsidiary companies all aound the country. Not once did state taxes get discussed by executive management! State taxes are just too small! ALL tax planning was at the federal level.
SOGTP March 28, 2012 at 07:44 PM
Frank - you misunderstood me. I met with Matt Ramsey (R-??) under the Gold Dome a few months back when he introduced a Bill just like this provision. His statement to me that INTERNET retailers made the playing field unlevel. I told him that is not true. INTERNET entrepreneurs innovated. The State criminals taxing the box stores unleveled the playing field. Stop taxing the big box stores and the playing field will be level.
Scott March 28, 2012 at 08:21 PM
You know. I wrote the Guv to ask him to veto the Cherokee school redistricting bill that had already passed and was on his desk... His office wrote back and said I should contact my legislative delegation. I guess they dont really read the mail/emails they get from regular people.
Frank Jones March 29, 2012 at 12:08 AM
@Bill...You're right, I did misunderstand you. Thanks for the clarification. I agree with you that internet innovators are a good thing and that the archaic sales tax system is flawed, and yet Georgia and the other states are going to fight tooth and nail to preserve the system. They want every retailer in every jurisdiction to accurately collect sales tax on all transactions based upon where the consumer lives. The problem with this is that all states charge sales tax differently...different rates, products and services...and it is confusing! Their solution? Internet innovators will form to decipher all sales tax rules and sell the information to merchants, increasing their costs. Sounds like the states are trying to suppress internet businesses, stifle competition and protect brick and morter businesses. And in the process, make consumers pay more.
Grassroots April 25, 2012 at 12:05 AM
I am amazed at how ill informed all of these comments are. This bill has been in total or in part introduced, study, and had hearings for the past 7 years. You can nit pick the bill for not going far enough not being directed the way your interests would like I get it but how about not making up stuff. For instance this bill does not affect the education budget. The internet tax is the first step toward the change to eliminate the income tax and move to a consumption tax. If you want to complain go ahead but be smart about it.
Frank Jones April 25, 2012 at 02:21 PM
@Grassroots...some of these items have been discussed for more than 7 years as part of other tax plans. The problem with this plan and its changes was the haste that it was presented, the lack of study of the specific impacts of these items, and the lack of time for public comment. If you recall, in 2010, the legislators presented a bill and a study that supported that bill. That study was proved wrong and the 2010 bill did not pass. Bills passed quickly often aren't good bills! I agree with you that this bill is a small move towards consumption based taxes (i.e. sales tax) with the ultimate goal of certain legislators to eliminate the income tax. However, the legislators increase the consumption tax on individuals while reducing the consumption tax on agriculture supplies and jet fuel (they carved out exceptions to big business). If you're smart, you know that any shift towards consumption/sales taxes will allow the wealthiest to shelter sizable portions of their income from taxes while forcing everyone else to pay tax on every dollar they earn and spend.
IamJohnGalt May 08, 2012 at 11:49 AM
Chip Rogers calls himself the "Conservative Workhorse". If he were truly conservative it would not be necessary to label himself. David Rawlston is a Boss Hogg caricature that needs to be voted out of leadership. Governor Nathan Deal was a raw deal from the very start of his candidacy. Other than that Georgia politics is just peachy.
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