Georgia's Tax Reform Package Better Than Perdue's Original Idea


Posted by Joshua Culling on Monday, April 19th, 2010, 5:09 PM PERMALINK


It looks as if Georgia taxpayers are finally in the clear. Last week, the House and Senate both passed an amended version of HB 1055, a mixed bag of tax increases and tax cuts that ATR ultimately (if halfheartedly) supports.
 
To be clear, this bill represents a tax increase in the short term. But after five years, the statewide property tax will be completely phased out, and the state tax on retirement income would be almost completely eliminated. The hospital tax increase is set to expire in three years, though we assume there will be a fight to extend it come 2014. There is never a sure thing when dealing with temporary tax increases.
 
The final product comes after a considerable amount of drama under the gold dome. Gov. Sonny Perdue first proposed the hospital bed tax in his budget address on January 15. He attempted to force it down the throat of the trade association representing Georgia hospitals, threatening a 16 percent cut in Medicaid reimbursements should the Hospital Association not agree to endorse the tax increase. ATR wrote a letter to the legislature on January 28 in opposition to the hospital bed tax.
 
The bed tax passed the Georgia House on March 26 with 38 Representatives violating their Taxpayer Protection Pledge. It was amended in the Senate to include an elimination of the statewide premium tax – the bill a still net tax increase, by ATR’s estimation – and sent back to the House. The House flatly rejected the premium tax cut, and we were back to square one.
 
Then, Gov. Perdue decided to levy a baseless attack on ATR for our role in this fight, citing lawmakers that attempted to uphold their Taxpayer Protection Pledges and work to counterbalance the Governor’s massive tax increase. To be clear, the Pledge is a promise to constituents, not to ATR. We merely ask that Pledge signers uphold their commitment, and inform the public when they do not.
 
When you became Governor you chose to raise taxes rather than restrain the runaway government spending by the state of Georgia.  Taxpayers asked that you spend less and you decided to tax more.  Americans for Tax Reform represents those taxpayers in Georgia who are paying higher taxes because you refused to restrain spending. And now you wish to raise their taxes again rather than make the decision to spend less.

Taxpayers are not a special interest group, Gov. Perdue. 
Eventually, the Senate took up HB 1055, amended it to include the hospital tax, added the two phased-in tax cuts, and voted it through to the House. The House passed it as well, and it awaits Gov. Perdue’s signature or veto. We are told he will sign. He has pushed for these two specific tax cuts in the past. Nothing is ever certain with Gov. Perdue, though. It took him less than 24 hours upon taking up residence in the governor’s mansion to propose a $762 million tax increase in 2003.
 
That it took us until this afternoon to put our position in writing speaks to the lack of transparency in the Georgia legislative process. The hospital tax was amended multiple times throughout the process, often directly before a vote. Interested and affected parties had little time to evaluate the evolving legislation as it made its way through the legislature. Ideally, all legislation with an appropriation or tax implications would be posted online in a searchable format for at least five days before a vote. This should be a priority for Georgia lawmakers next year.
 
In sum, the bill is uninspiring, but one that ATR can support. It is important that the tax increase on hospitals sunsets after three years, and that future legislative sessions do not see tampering with the phased-in tax cuts, as happened last year in Ohio when Gov. Strickland “delayed” the final year of a five-year phased in income tax cut. The elimination of the statewide property tax is welcome relief to overburdened taxpayers in the state.
 
My rule of thumb has always been: If Sonny Perdue supports it, it probably has an adverse impact on taxpayers (see the JOBS Act of 2009). Perhaps this year is not the same.

UPDATE: I just heard from Speaker Ralston's office. I erroneously stated that HB 1055 was amended in the Senate and then passed to the House. In fact, it was amended in the House and then passed to the Senate. That's not to say that any one body is "responsible" for adding the tax cuts; there was constant communication between both chambers that produced the final agreement. It is important, though, to clarify that the bill was amended in the House to include the hospital tax increase, the statewide property tax elimination, and the retirement income tax cut.

This only underscores the importance of transparency in the legislative process in Georgia. Taxpayers (and taxpayer advocates) deserve time to scrutinize important legislation before lawmakers vote. Public policymaking is a fluid process, but should be done openly and under the watchful eye of the taxpayers footing the bill. That is currently not the case in Georgia.

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