Tax code revisions are necessary, lawmakers say

Code revisions are necessary, lawmakers say

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After two months of working behind the scenes, it's decision time for lawmakers on state taxes.

In coming weeks, legislators will decide whether to vote on a comprehensive plan to rewrite Georgia's tax code, a proposal that could lead to higher taxes on groceries, cigarettes, person-to-person car sales and services. The proposal also would lower income taxes for most Georgians.

Or legislators will decide whether to vote on bits and pieces of the plan.

To gauge support -- or lack of it -- for the plan, The Atlanta Journal-Constitution interviewed 20 lawmakers last week on six key parts of the proposal. Most support lowering income taxes, but many lawmakers acknowledged that the state also needs to raise enough revenue to pay for services such as schools and health care.

"It has to be balanced," said Rep. Don Parsons, R-Marietta. "We can't have a bunch of cuts in taxes without trying to balance it somehow."

Putting off the tax-code reform during the 2011 session might kill the idea for a while. Few lawmakers will want to address it in 2012, an election year for all 236 lawmakers.

But many of those interviewed argued that the state tax code has to change with the times.

"We have an income tax code from the Depression, we have a sales tax code from the 1950s, and we're now starting the second decade of the 21st century," said state Sen. Doug Stoner, D-Smyrna.

GROCERY SALES TAX

Lawmakers were split on this issue, with more Republicans than not willing to consider it if paired with lowering income taxes. Democrats generally oppose it.

The plan calls for the state to begin charging its 4 percent sales tax on all groceries. Supporters say it is a tax everybody -- including those who don't file state income tax returns -- would pay.

"It would be the most consistent source of revenue. Everybody has to eat," said Sen. Butch Miller, R-Gainesville.

But Democrats worry that it would most hurt the poor and middle class, who spend a greater portion of their income on food.

Sen. Vincent Fort, D-Atlanta, said he couldn't vote for any bill that included a grocery tax. "No, absolutely never," he said.

Not all Republicans are sold on it either. "I don't vote for tax increases," said Rep. Alan Powell, R-Hartwell.

TAX ON INVESTMENTS

The plan calls for the state to eliminate exemptions on certain nonwork income, such as investments and pensions, for senior citizens. It would not affect Social Security or most disability payments.

Under state law, the first $35,000 per person, or $70,000 per couple, of nonwork income for seniors is exempt. Starting in 2012, the state will begin completely phasing out taxes on seniors for nonwork income.

Lawmakers were mixed on the issue. Some said there was no way they would take the exemption away from seniors. Others said it needs to be considered.

Rep. Nikki Randall, D-Macon, said she might support keeping the exemption for lower-income seniors.

"Some seniors have a whole lot more in investments than others, so I think it should be means-tested," she said.

But Rep. Sharon Cooper, R-Marietta, said lawmakers would be breaking a promise they made in recent years to seniors if they eliminated the tax break.

"I have real trouble when they make promises to people and then renege on those promises," she said.

STATE INCOME TAX CUT

The trade-off for raising grocery and other taxes would be a drop in state income taxes, from a top rate of 6 percent to 4 percent or less.

Republicans have long argued that the state should be taxing things people buy or spend money on instead of the income they earn.

"I would like to see a greater reduction in income taxes and a move solely toward a consumption tax," said Rep. Tim Bearden, R-Villa Rica. "I would like to basically see an elimination of the income tax."

Opponents say the trade-off would result in the poor and lower middle class paying more in taxes.

"I think in reality, if we are going to tax groceries, for someone earning $50,000 a year, they will pay more in sales taxes than the reduction they receive in income taxes," Stoner said. "I don't think that has been well thought out."

NEW TAX ON SERVICES

The tax council has proposed extending Georgia's 4 percent sales tax to a host of services never before taxed, including veterinary procedures, tire rotation, haircuts, country club memberships and dozens more.

Though the issue is far from settled, two-thirds of Republicans surveyed either were opposed to taxing services or were undecided.

"My wife is a hairdresser. It will impact me and my family personally," Rep. Brett Harrell, R-Snellville, said.

Like many Republicans, Harrell said he is concerned that many will see it as a tax increase on families and would only support it if balanced with income tax cuts.

Rep. Ben Harbin, R-Evans, said he did not think the idea had much traction with voters. "The thought of having to pay taxes on haircuts, or pay taxes on services ... people just aren't comfortable with that," he said.

Others said the idea is at least worth considering.

"Desperate times call for desperate measures," Randall said. "It's obvious that our state is going through some desperate times."

CIGARETTE TAX INCREASE

The tax council recommends Georgia's 37-cent tax on a pack of cigarettes be raised to 68 cents. The proposed tax is an average of the surrounding states, but it would be the second-highest next to Florida's $1.34.

Opinion is split among lawmakers on raising the tax, with a slight edge toward approving an increase. Democrats generally support increasing the tax, which is among the nation's lowest. Republican sentiment is more divided.

"I'm against any tax increase," said Rep. Mark Hatfield, R-Waycross, summarizing the feelings several GOP lawmakers surveyed.

Rep. B.J. Pak, R-Lilburn, said he could support increasing the tax if it was part of an effort to reduce health care costs by discouraging smoking. But there is a limit, he said.

"I think the American Cancer Society wanted to raise it a dollar, but if you raise it a dollar you are going to kill businesses on the border," he said.

Cooper said she would support raising the tax because she believes it would result in fewer young people starting smoking.

"I'm a nurse. I've held people's hands when they are dying, gasping for breath," she said.

PRIVATE CAR SALES

The plan recommends the state collect sales tax on private sales of cars, boats and airplanes. The tax already is collected from dealers.

The tax council believes it could generate about $150 million in state taxes annually, but many legislators have yet to form a hard opinion on it.

Rep. Ron Stephens, R-Savannah, said he could support the tax as part of a comprehensive overhaul.

"Auto dealers are at a competitive disadvantage under the current system," he said.

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curly123053
5198
Points
curly123053 03/07/11 - 07:21 am
0
0
It's time for the Georgia

It's time for the Georgia State Fairtax to be passed. It has wide support in the SC State House and Gov Haley is on record as being a Fairtax supporter. It would be a tremendous boost to the see both states pass their state Fairtax laws.

DuhJudge
206
Points
DuhJudge 03/07/11 - 07:30 am
0
0
Tax services. It should not

Tax services. It should not be the burden of merchants to collect and remit sales taxes alone. Half of the world is in a service business and their "products" are exempt. Think about how much money could be raised if lawyers, doctors, insurance, advertising, and even car washes were taxed each time they sold their "product". If so many things were not exempt from being taxed, I would expect the actual tax rate on everything would go down. Ultimately, most people would be paying less tax.

Chillen
17
Points
Chillen 03/07/11 - 09:58 am
0
0
Frankly I'm surprised at the

Frankly I'm surprised at the GREED here in Georgia by our politicans (well, actually not so surprised). And, how "surprising" that Democrat Randall wants to exempt low income folks from some of the taxes.

They have plans to tax everything that moves and everything that doesn't. Oh yes, they justify it by saying it's only 7 cents here, $4 there, or just hundreds of dollars to help car dealerships compete (the car tax). They also justify it by saying they will lower our state income taxes - but will they? Or will they do it for just "certain" income groups.

I didn't see it addressed in this article, but also on the table are new taxes for cable service, cell phones, home phones. Yes, every month your bills would be higher.

Politicians. Hear us now. NO NEW TAXES!

Gov Deal had better get control of these folks or he'll find himself unemployed in 3 1/2 years and unable to pay off his business debts.

justthefacts
24071
Points
justthefacts 03/07/11 - 10:05 am
0
0
Chillen, are you opposed to

Chillen, are you opposed to "use tax" vs "income tax" method of taxing? Seems to me you have much more control in the amt of taxes you pay under a "use" form. Plus, it would encourage more industry to consider Ga. Income tax rate of the proposed state is a big driver in those decisions.

Chillen
17
Points
Chillen 03/07/11 - 10:10 am
0
0
No, I'm not opposed to a

No, I'm not opposed to a consumption tax but I am concerned that they will put the new taxes in place and then only lower income taxes for some groups - I guess I didn't articulate well enough.

justthefacts
24071
Points
justthefacts 03/07/11 - 10:13 am
0
0
You should read the entire

You should read the entire proposal. The decrease in Income tax is significant. I believe they consider it step one of complete removal of state income tax.

Chillen
17
Points
Chillen 03/07/11 - 10:30 am
0
0
Can you tell me where I can

Can you tell me where I can find it? I'd love to see it.

justthefacts
24071
Points
justthefacts 03/07/11 - 11:10 am
0
0
Riverrunner30909
149
Points
Riverrunner30909 03/07/11 - 12:42 pm
0
0
People you really need to
Unpublished

People you really need to read what they are planning. Not just taxing Items that have not been taxed before, but also removing the exemption for retirement income and such. Here is a link to the Proposed Bill.

http://atlantabsa.doubleknot.com/openrosters/DocDownload.aspx?id=91865

Taylor B
5
Points
Taylor B 03/07/11 - 01:29 pm
0
0
It is a net tax increase.

It is a net tax increase. Period.

justthefacts
24071
Points
justthefacts 03/07/11 - 01:45 pm
0
0
Taylor, how do you know that?

Taylor, how do you know that?

seenitB4
93884
Points
seenitB4 03/08/11 - 08:46 am
0
0
Oh yeh...tax the seniors &

Oh yeh...tax the seniors & see what happens at the next election...why don'tcha..
What if we kick behinds off the couch--make work necesaary to eat---stop ripping the folks who saved & rewarding those who don't!!
BTW...how many kids can a woman have & still get freebies for each one?? This isn't a riddle.

Ontarian
0
Points
Ontarian 03/08/11 - 11:28 pm
0
0
Tax on private sales of cars

Tax on private sales of cars and tax on dealers' sales are not the same thing! Dealers did not paid sales taxes when they get their used cars, your government refunded the sales tax when they take your trade-ins. Private sale cars are already tax paid. Don't believe for a second "dealers are at a competitive disadvantage", they never were. Instead, they are trying to get a competitive ADVANTAGE over private sellers.

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