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Reducing, eliminating Ga. state income tax brings problems, report concludes

Wednesday, Aug 7, 2013 6:07 AM
Last updated 11:25 PM
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ATLANTA   – A report released this morning highlights the political challenges to Republican proposals to reduce or eliminate the state income tax.

The study by an Atlanta think tank geared toward increased spending on social programs, the Georgia Budget and Policy Institute, warns that any increase in the sales tax to offset income-tax reductions will boost the burden on 80 percent of Georgians.

A Georgia Tech economist who advocates a diminished income tax, Christine Ries, dismisses the report’s conclusions as being skewed by biased data.

Wesley Tharpe, the institute’s policy analyst who authored the report, said since low-income people spend a greater share of their income then boosting the tax on their spending will hit them harder.

“Changing the balance of taxes and how much the state relies on each kind of tax shifts the burden,” he said.

Ries counters that higher-income people spend more money. They may pay a smaller share of their income on consumer purchases, but it amounts to more money.

This year, several states have passed legislation to reduce their income taxes. Before this year, the last state to do it was Alaska 50 years ago when it struck gas on state-owned land, allowing it to end the tax and instead actually give each resident a check from the government.

Members of the Georgia House and Senate introduced various bills to limit, cut or eliminate income taxes during the 2013 session of the General Assembly. None came up for a vote, but observers think they might next year.

Ries has become a leading advocate. She argues logic suggests a government should tax what it wants less of and not tax what it wants more of.

“If you tax consumption, you’re going to get more income, more savings and more investment in the future,” she said.

On the other hand, Tharpe and the think tank are becoming vocal opponents of income-tax reduction. They argue that it won’t stimulate the economy.

“I think the alternative viewpoint is based on a misreading of the economic evidence,” he said.

He estimates halving the income tax would require a 9.6 percent state sales tax on top of what local governments charge, plus a tax on food and services like haircuts and cable television. Eliminating the tax completely would require either a 14.5 percent sales tax or a 13.8 percent tax if groceries and prescriptions are also subject to the sale tax.

What other states have done to avoid unpopular sales-tax hikes is to cut spending. Tharpe argues that would rob the state of future growth by harming education and transportation.

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angedelune
223
Points
angedelune 08/07/13 - 06:55 am
3
6
good idea!!

i'm all for this. I may end up paying a little more in taxes, but that means everyone is pulling his/her fair share. I also say we need to slap a dollar tax on every bottle of alcohol sold to help pay for psych programs in this state and a 2 dollar tax on every box of cigarettes to help fund our healthcare/ga medicaid/ga medicare

nocnoc
45058
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nocnoc 08/07/13 - 07:30 am
8
0
WOW who would have ever guessed that

An Atlanta Group using a deceptive name like the "Georgia Budget and Policy Institute.", whose openly stated goal is to increase spending on social programs .

Would have a problem with cutting taxes, instead of funding more handouts and social programs?

As a human I will always care for my fellow man down on his luck. But I also don't want to be enabling a people to live off a system and never try to earn their way in life again.

restguy
383
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restguy 08/07/13 - 08:07 am
6
0
Fla & Tn do it already.

Fla & Tn do it already. Georgia can do it too.

dichotomy
34479
Points
dichotomy 08/07/13 - 08:42 am
6
0
If other states can do it

If other states can do it with a single digit sales tax and NO income tax, so can GA. Why, would GA need 14.5% when TN does it with 9.5%, FL does it with 6.5%, and TX 6.25%? And many of those states exempt prescription drugs and food and also have a cap on sales taxes for automobiles and other high ticket items like major appliances.

Sounds to me like we ALREADY HAVE way too much "social welfare" spending. I say we she dramatically CUT social welfare program spending and my bet is that the EMPLOYMENT RATE would go UP dramatically and the economy in general would improve in GA.

deestafford
28750
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deestafford 08/07/13 - 08:52 am
5
0
Well, what do you know? Another "social justice" outfit wanting

to take from the producers and give to the moochers.

I would like to see the same thing done at the national level with the "Fair Tax" but it's unlikely because it takes power away from the politicians...the statesmen would be all for it.

The figures given by the "think" tank of how high the sales tax would have to be is nothing but smoke, not even any mirrors involved.

The problem I see with us here in Augusta is we are already paying 8% and an increase is going to take us over or close to 10%. However, I would still like to see the income tax cut and it can be done with a reduction in spending and economic growth would make up for the difference.

JRC2024
9309
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JRC2024 08/07/13 - 08:59 am
4
0
More "Social Spending" my

More "Social Spending" my foot. Decrease it and help the economy and the tax payer.

Darby
26958
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Darby 08/07/13 - 09:39 am
7
0
Cut Spending....

"Tharpe argues that would rob the state of future growth by harming education and transportation."

There they go again... Each and every reduction in spending is going to "hurt" education.

They never explain why. And they never explain why constant increases in spending NEVER HELP education.

Could it be that our eduction problems have a solution that isn't to be found in the taxpayer's wallets?

Let's just keep throwing good money after bad, shall we..???

Bodhisattva
6466
Points
Bodhisattva 08/07/13 - 09:49 am
1
4
Florida does it by having
Unpublished

Florida does it by having millions of tourists, and a corporate income tax. Texas does it by having taxes on a bunch oil, and high taxes on motor vehicle transfers and franchise fees. Tennessee does tax income from dividends and investments, just not on wages, and also has no homestead exemption and has high property taxes (the counties fund a lot themselves and don't rely on state money). States have to function. They get their money one way or another. Be careful what you wish for.

Dixieman
15999
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Dixieman 08/07/13 - 10:33 am
7
0
Rolling on the floor, laughing...

Name one country that ever taxed its way into prosperity.
What a bunch of rubbish from Atlanta.

Darby
26958
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Darby 08/07/13 - 10:55 am
5
0
Bod says.....

"States have to function. They get their money one way or another. Be careful what you wish for."

.
States DO have to function. However, there's no rule that says they have to spend like drunken sailors to do it.

And there's no rule that says that efficiency is limited to private industry either.

Note: For validation, please see... DETROIT.
For that matter, please see the entire state of California.

Taxed Enough Already!

Sweet son
10747
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Sweet son 08/07/13 - 12:25 pm
5
0
Wesley Tharpe: You guys have thoroughly bashed this guy!

I love it! He is nothing more than a flaming liberal with 'entitlement' tattooed on his forehead. He is so dumb. The poor don't spend more money because they don't have more money and of course they figure out a way not to pay any Georgia income taxes. Most probably they just don't file tax forms at all. If nothing else sales taxes would tax all of the illegal drug money and we don't care if the drug dealers pay out of their behinds. And we also know that the drug dealers don't pay any income taxes!

rmwhitley
5547
Points
rmwhitley 08/07/13 - 05:57 pm
0
0
Wesley Tharpe
Unpublished

is from the 1964 and 1965 school of being a dropout, relying on successful people to support them ( dropouts), and blaming those who actually have drive and ambition. Just like these morons who dropped out of kindergarten, work in fast food restaurants and demand at least $15.00 an hour. Just a redistribution of the wealth. Lefties, you're entitled to an education. If you're too sorry to get one, tough manure.

nocnoc
45058
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nocnoc 08/07/13 - 08:30 pm
3
0
Sweet son - hits on something in around about way.

I wonder if the FED or GA IRS cross check EBI and other freebie rolls to see it tax returns are filed and if the amount filed match what they put down to get the freebies?

corgimom
34196
Points
corgimom 08/07/13 - 09:23 pm
0
3
Nocnoc, I can personally tell

Nocnoc, I can personally tell you that the Social Security Administration checks my personal tax return each and every freaking year to see if I have earned any income, since I am disabled. They've questioned me in the past when they couldn't find my tax return from the IRS, after I got married.

Yes, they do, so sorry that you see disabled people as getting freebies.

corgimom
34196
Points
corgimom 08/07/13 - 09:24 pm
0
3
I also had to submit a tax

I also had to submit a tax return in order to obtain a Pell Grant, another "freebie" that you obviously think nobody deserves.

Bantana
2071
Points
Bantana 08/08/13 - 05:51 pm
0
0
dixieman

The Scandinavian countries enjoy a high level of prosperity and satisfaction with their high quality of life and their tax structure would make a good old boy gag. But then, we have our "freedom" over here along with Georgia and South Carolina ranking at the absolute bottom on the "happiness scale".

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