Conservative group ranks Ga. 10th in economic potential, S.C. 27th

Report authors suggest Georgia eliminate state income tax

Thursday, April 12, 2012 7:08 AM
Last updated 4:11 PM
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ATLANTA — Tax policies are keeping Georgia and South Carolina from having more vibrant economies, according to a report released Wednesday by the conservative group American Legislative Exchange Council.

ALEC issued its annual ranking of states based on how much growth potential the group thinks local tax policy holds. It also tracks states’ performance, which doesn’t always match predictions in the Rich States-Poor States study.

According to the group’s rankings, Georgia has the 10th best potential even though its actual performance is 33rd. South Carolina’s 27th place potential, though, is only slightly better than its 29th rung on the performance ladder.

“There are a lot of things that affect a state’s economic outlook besides their policy,” said Stephen Moore, one of the study’s authors, the founder of the Club for Growth think tank and now a columnist for The Wall Street Journal.

Energy production is a major factor for the states leading the rankings.

For instance, Utah tops the potential list for the fifth consecutive year, followed by South Dakota, Virginia, Wyoming and North Dakota. While Utah is only 12th in performance, Wyoming tops the list, followed by Texas, Montana, North Dakota and Alaska.

Georgia shows great potential, according to the report, because it has the lowest tax burden based on personal income, no estate tax, a minimum wage as low as the federal floor and makes union membership optional. It doesn’t rank better because it has no limits on state spending, has a high sales tax and workers’ compensation premiums, and its courts favor consumers over businesses.

It should start improving by ending its income tax, the authors said during a teleconference with reporters.

“Georgia kind of has an imperative to get rid of its income tax because it’s surrounded by states that have no income tax,” Moore said, pointing to Tennessee and Florida.

The lead author, economist Arthur Laffer, came to Georgia in 2007 to advise then-House Speaker Glenn Richardson on eliminating a type of tax. Richardson picked the property tax but ultimately failed to win passage in the Senate.

In recent years, two separate tax-reform commissions have looked for ways to end or reduce the state income tax. After the legislature rejected the first one’s recommendation to replace part of it with a sales tax on food, the second commission didn’t even touch the subject.

Laffer said lowering state spending would eliminate the need for the income tax.

“What you’re got in Georgia is a 10th ranking, which shows a lot of potential, but you’ve got to look at tax expenditures,” he said. “I think you’re spending more than you should.”

South Carolina’s tax policies fared poorly in the authors’ eyes for having a high, graduated income-tax rate and loads of state debt. It was also tagged with having courts that aren’t friendly to businesses and high worker’s compensation premiums.

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docroc 04/12/12 - 09:03 am
In my opinion, Georgia should

In my opinion, Georgia should adopt a 5 yr plan to phase out income tax. I personally know several folks that have moved to Fla citing the tax situation.

David Hopper
David Hopper 04/12/12 - 12:57 pm
(the website is

(the website is, btw)

There is nothing wrong with being required to prove who you say you are when voting. If you want fair and open elections, then all sides have to be honest. I'll give you a current example that actually happened.

If a man who says he is Eric Holder is allowed to vote by poll workers without showing identification (and is clearly NOT Eric Holder) what kind of message are we sending to the rest of the country, and our youth? That is is 'OK' to lie, as long as you win? That is not how things should be done.

The first thing this report (from a conservative group, I know) says that we can do to improve our tax base is to cap spending. Regardless if the other suggestions work or not, that is a good idea. That WILL work. Why do people spend more money than they earn? Why should we allow our government to spend more money than it earns?

The Georgia Assembly passed a good budget through for Fiscal Year 2013 in late March. That is the only legal requirement of our state legislative body. We had more money because of the whole home foreclosure bank settlement. Because of that extra income, the state approved a small increase in spending (about 5%). They did so because they had the money, in-hand to speak, in order to do so. It was STILL a balanced budget.

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