Norquist: Tax Reform in Georgia is About Reducing Marginal Rates


Posted by Joshua Culling on Monday, December 12th, 2011, 3:33 PM PERMALINK


Last year, Georgia lawmakers attempted historic tax reform, working to lower marginal rates while broadening the overall tax base. Unfortunately, their first attempt was miscalculated, resulting in a massive tax hike proposal. After working out the kinks, a revenue neutral reform was crafted that brought marginal income tax rates from 6 percent down to 4.5 percent. But the political maelstrom that resulted from the first attempt had not yet subsided, and the reform package foundered.

We commended Gov. Nathan Deal and the Republican legislature at the time, recognizing their steadfast belief that tax reform and tax increases are mutually exclusive. The conservative goal in any tax reform is to reduce marginal rates. Base broadening is generally a political pay-for in the name of making the tax code more competitive. But our friends on the left see base broadening (as well as targeted excise taxes) as the end goal, a stealth method of raising the overall tax burden.

Georgia seems prime for a second attempt at tax reform this year. ATR's position is that lawmakers should be laser focused on reducing the state's 6 percent marginal income tax rate, which is simply not competitive in the region. Any offsetting revenue should be less than or equal to the negative revenue impact of the rate cuts. It should also come from within the existing sales or income tax bases, rather than punitive and economically silly excise tax hikes.

Today in a letter to Gov. Deal, Grover wrote:

The conservative goal in any discussion of tax reform is to reduce marginal tax rates. While broadening the tax base in conjunction may also prove beneficial, it is important to do so in a way that is revenue neutral or a net revenue reduction for state government. At Americans for Tax Reform (ATR), our intent is to reduce the scope and size of government, removing disincentives for productivity and barriers to private sector job growth. The government’s ability to meddle in the economy is derived from its ability to tax; that power should be limited.

To read the entire letter, see below. For a PDF, click here.


December 12, 2011

Governor Nathan Deal
203 State Capitol
Atlanta, GA 30334

Dear Gov. Deal,

In advance of the 2012 legislative session, I write to express my hope that Georgia can build upon last year’s work to reform the state’s tax code in a way that does not increase the size of government or its burden on taxpayers. While last year’s effort to reduce marginal tax rates ultimately fell short, the work done in the legislature was a strong step in the right direction. I hope that 2012 will bring meaningful tax reform done in a way that complies with the Taxpayer Protection Pledge signed by you and 54 members of the Georgia General Assembly.

The conservative goal in any discussion of tax reform is to reduce marginal tax rates. While broadening the tax base in conjunction may also prove beneficial, it is important to do so in a way that is revenue neutral or a net revenue reduction for state government. At Americans for Tax Reform (ATR), our intent is to reduce the scope and size of government, removing disincentives for productivity and barriers to private sector job growth. The government’s ability to meddle in the economy is derived from its ability to tax; that power should be limited.

I also caution you and members of the legislature against conflating the idea of base broadening with the temptation of levying new targeted taxes outside the existing sales and income tax bases. Last year’s target was tobacco; this year may be a repeat, or we may hear proposals for excise tax increases on alcohol or sweetened beverages. Whatever the case may be, targeted excise tax increases drive commerce across state lines and hurt small businesses’ bottom lines. Any base broadening should be just that: expanding the scope of existing sales or income taxes and “using” that revenue to lower marginal rates.

But the most important part of tax reform is reducing the number of dollars the government extracts from the productive private sector. It should never be a political maneuver to raise taxes, as so many of our friends on the left have attempted in the past. Georgia’s 6 percent income tax rate is simply not competitive with neighboring Florida and Tennessee, which levy no such tax. The focus should be on reducing that rate and the government’s overall take – not on tax hikes.

I commend you for your commitment to veto all tax increases and hope to be helpful in any tax reform efforts. For any questions on this issue, please contact ATR state affairs manager Joshua Culling at jculling@atr.org.

Onward,

Grover Norquist

CC: Georgia House of Representatives

        Georgia Senate

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