Rep. Ramsey: Fair Tax in Ga.’s future?

Rep. Ramsey: Fair Tax in Ga.’s future?

Sees move from ‘counter-productive’ income taxes to consumption-based tax

As the 2011 session of the General Assembly begins next week, Rep. Matt Ramsey (R-Peachtree City) expects legislators will be grappling with the state economy, alternatives for taxation, immigration and the future of the HOPE scholarship.

State Senator Ronnie Chance (R-Tyrone) was also contacted for this report, but Chance did not return phone calls or respond to emails.

Ramsey said the good news is that Georgia continues to hold its AAA bond rating, one of only five states to do so in the lengthy recession. Yet Georgia must take the necessary actions to ensure that those conditions continue. And a big part of that will depend on the upcoming budget.

Gov. Deal is expected to present his revenue estimates sometime between mid to late January, Ramsey said, adding that the current $17 billion budget may well have to be cut another $1-2 billion if initial revenue estimates are correct.

“Some people are saying this will be the most difficult budgeting process we’ve gone through, where we will have to cut further and deeper,” Ramsey said, adding that, “The sense I’m getting is that there is a little more optimism for the next two to four years in where the economy is headed.”

In terms of Georgia’s 10 percent jobless rate, Ramsey said Georgia needs to be on the leading edge of job creation. Yet the job creation that leads to fewer unemployed residents and a more stable economy has been a hard nut to crack for legislatures across the nation.

Ramsey said he is waiting for the coming release of the Tax Reform Council’s report and the recommendations that will flow from it. Created last year by the General Assembly, the council was tasked with studying the state’s tax code.

And it is that tax code that Ramsey said needs to receive close attention by the General Assembly, with a portion of that attention geared to a form of taxation that is consumption-based.

“The notion of taxing income is counter-productive from an economic standpoint,” Ramsey said, adding that the tax code should be less reliant on revenues from business and individuals and more geared toward revenues based on consumption.

So the alternative, he said, could be something in the direction of some type of fair tax device, something that several others states have successfully implemented.

Another topic expected to loom large on the General Assembly’s radar this year is immigration.

“This is a big issue and one I’m personally involved with,” said Ramsey. He and Sen. Jack Murphy have worked collaboratively to introduce bills to continue to address the issues.

“It is very clear that there are significant social and economic consequences with the 450,000 illegal aliens in Georgia with a cost of $1-1.5 billion to state and local governments in Georgia,” Ramsey said. “We would be derelict in our duty if we didn’t address this issue. And it’s an important issue that’s going to be hotly debated because it brings out passions from both sides of the ideological spectrum.”

And on the issue of the HOPE scholarship, Ramsey said the program is becoming a victim of its own success since expenditures continue to exceed revenues. Ramsey cited a House Budget Office estimate that approximately $250 million in HOPE reserves will have to be used this year.

Those reserves totaled more than $1 billion in 2009, yet could shrink to around $300 million by 2012, Ramsey said.

Ramsey is in his third term in the House. He was appointed in the fall as House Chair of the Special Joint Committee on Immigration Reform.

JeffC
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Ho-Hum, the FairTax again

Any interest you pay over the prime rate on any debt is subject to the FairTax. I predict that a 25% tax on debt interest is going to be very popular.

Robert W. Morgan
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Liberal elite interprets Fair Tax for us peasants

Jeff, if you think a provision like that (which may or may not be in the book) would survive a vetting by a GOP dominated group at either the state or federal level - you are smoking dope.

Dems are trying very hard to demonize this thing because they know once it is instituted that it will be impossible to go back to the old ways. Of course the Dems will try and sneak some things into a Fair Tax law that are completely irrelevant - like the 1099 provision into health care. But it should be an interesting debate - if for no other reason than to see how different politicians actually understand the Fair Tax and what spin they put on it for their own purposes.

If there was ever anything wrong with government, it is epitomized by the IRS. And a close second would be the 111th Congress.

Observerofu
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Let's have an honest debate about it

instead of the usual bovine excrement comments from the left.

If it is really so bad then an open discussion between the authors and the detractors would bring it out and the Citizens that have to pay the dang taxes could decide.

Instead the left doesn't even want to consider it because once they open that Pandora's box then the public at large would then think they might have options.

http://www.fairtaxspeaker.com/FAIRTAX/PLAIN/fairtax-plain-language.htm

For JeffC's argument see Sec 801

SEC. 801. DETERMINATION OF FINANCIAL INTERMEDIATION SERVICES AMOUNT.
Interest rates may be viewed as having five components: (1) the normal (risk-free) return on capital, (2) the compensation to the lender for the expected loss in purchasing power (inflation) caused by excess money and credit creation, (3) the premium paid for the risk that the capital will not be repaid, (4) the compensation to the lender for taxes due on the interest, and (5) the payment for financial intermediation services – the servicing of the loan or deposit. Item (4) is no longer relevant since income taxes are repealed and the FairTax does not tax interest. The FairTax does tax the last component (5) of interest which is the implicit payment for financial intermediation services. This is not simple. Although some financial intermediation services are explicitly charged, in practice they may be incorporated into the interest paid. Similarly, insurance premiums have a financial intermediation services component. Under the FairTax, financial intermediation services purchased by consumers are taxable services, while financial intermediation services purchased by businesses are exempt as business inputs.

"The FairTax is not imposed on the risk premium (item (3) above) because lenders get a credit equal to the FairTax rate times their bad debts.

Example: For a 30-year fixed rate home mortgage, the measure of the taxable financial intermediation services is the mortgage interest rate minus the interest rate for a 30-year Treasury obligation (which represents the price of items (1) and (2) above) times the mortgage balance.

Example: For a checking account that pays no interest, the measure of taxable financial intermediation services is the interest rate on short-term Treasury obligations times the average daily deposit during the month."

I agree with Jeff read the Bill.

JeffC
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Read the bill Robert

Read the law not the propaganda. HR 25 section 8, Implicitly Charged Fees Financial Intermediation Services

Any interest you pay over the basic interest rate as computed by the Secretary of the Treasury each month (see section 511 - Applicable Interest Rate) is considered part a taxable financial intermediation service.

Georgia Patriot
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Thanks Fellas

There are a lot of people behind you, keep up the good work! -GP

Chris P. Bacon
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"Fair tax", eh?

Does this mean the state of Georgia will be establishing a prebate office so that everyone gets a check each month to defray the cost of the tax?

Does this mean the tax-exclusive tax rate will jump to 20-30% solely at the state level?

I seriously doubt it.

This is either Ramsey...or more likely, FairTax fanboy Ben Nelms...blowing smoke up our collective keisters.

Stupid "headline", Citizen.

PTC Observer
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Ramsey & Chance

Aren't these the two guys that supported the Regional TSPLOST law?

While it is a consumption tax, Regional TSPLOST puts Fayette at a disadvantage in deciding whether or not it wants a new tax. The adjacent counties with greater populations will decide for us.

The AAA bond rating is there because they must balance the budget under the Ga. Constitution.

Finally, the income tax in Ga., unlike the Federal tax coda is pretty simple. Why do they really want to change it? What is broken here that we don't see? In my opinion, the Tax Reform Council is nothing but cover for the politician to raise taxes.

Gort
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PTC_0, I take it you are no

PTC_0, I take it you are no fan of Fair-Tax?

PTC Observer
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Gort - you

You didn't answer my question.

But I will answer yours:

There is no such thing as a "fair tax". All tax is intricately unfair because tax is driven by gimmicks and not so hidden self-interest.

Remember, we live in a democracy, where we have "mob" rule. A democracy is a form of government that allows the majority live off the minority.

We need to return to a Republic, but alas it will never happen in my lifetime.

Robert W. Morgan
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This is how a real movement begins - locally

This is the beginning of a movement to introduce a Fair Tax nationally. No one really believed that a Fair tax would pop up in US Congress early in 2011 and get approved quickly. Instead, several states will get a Fair Tax and iron the kinks out and when the Fair Tax comes up after the 2012 removal of Obama and half the old school Dem Senators, there will be enough background and experience to have intelligent testimony in Congress - as opposed to the immature rantings you see from a few narrow0minded people on here.

My prediction is that a Fair Tax will be voted on in US Congress in early 2013 and if it passes enacted in 2014.

Chris P. Bacon
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A real movement begins...

If you want to begin a "real movement", ask your night nurse for an ex-lax tablet before you turn out the lights. You might wish to notify the local HAZMAT authorities, though, given how full of it you are.

There are few things more dishonest than the intellectual fraud that calls itself the "Fair Tax", but a "State Fair Tax" is one of those things.

Anyone who thinks that the general public's hatred of the IRS is so great that they'd willingly pay a sales tax rate somewhere between 50% and 70% (combined state/federal fair taxes) is truly delusional.

PTC Observer
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Bacon - but

Isn't that what you want?

It would seem that a 50 to 70% tax rate is right up your alley, heck under your philosophy we should just work outright for the state. Let it decide where all the money should go. The government so good at it, right?

Your continued defense of everything government, reveals your intent. Just go with it, "Fair Tax", "Progressive Tax", it's all the same if it is used to meet social "good", right?

Chris P. Bacon
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No Petey C, don't misconstrue me!

Not at all!

I like the idea of a graduated progressive income tax structure up to a maximum of 50% (hey, if it was good enough for Reagan).....

Note the word "graduated"...this does not mean all income would be taxed at 50%, the first "x" amount of income is taxed at a much lower rate, the next "x" amount of income is taxed at a slightly higher rate, etc, etc, until you reach a top rate for the highest income earners.

Contrast that to the intellectually dishonest "FairTax", where the lowest wage earners in society are subjected to a punishing 50%+ sales tax.

The two concepts are not even remotely the same!

roundabout
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More ways to bankrupt common wage earners

Now the state of Georgia also wants to put a 4% sales tax back on food!

Cut out all corporate taxes.

A sales tax on all "services." Even CPAs and Drs. dry Cleaning and all.

Raise something like a billion bucks off us so they can spend, spend, spend, again.

How are retired people who must eat and have services to survive?

Who gives a dam?

Do they intend to pay back the loan from Washington for advances on unemployment payments? About half a billion so far.

They didn't say how much they plan to cut the counties out of next years school allowances, etc.

How will a bankrupt Governor figure out this mess? They are allowing him to put off about a million bucks he owes to banks for four years on a balloon payment. Maybe he can do the same for GA?

PTC Observer
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Oh, Bacon

so, you do have a limit, but if I recall correctly there was a limit when the 16th Admendment was ratified. I think the progressives sold it on the notion that only the very rich would pay income taxes and the maximum they would have to pay was something like $1,500.

How did you arrive at 50% as being the "fair" percentage? Your form of the "fair" tax. Why nor 60% or 45.7%?

Just curious.

Chris P. Bacon
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Fifty percent

Hey, fifty percent was good enough for Ronald Reagan in 1981, so I'm thinking conservatives will be okay with it.

Fifty percent is a simple concept that even dullards like ObserverofU can comprehend.

PTC Observer
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OK - Bacon

We'll take 50%, then we will add 6% for Georgia so 56% then we will throw in let's say 4% for all other taxes, a nice round total of 60%. So, for every dollar earn we get to keep 40 cents.

Now, let's say we make $200,000 profit running a small business which most of us don't. That leaves us with $80,000 after tax to spend, save, etc. and $120,000 going to the government in various ways.

But let's say that we are poor and we earn only $30,000, well we get to keep this plus the government gives us another credit (check) for say $4,500 and we get food stamps, WIC, and a whole set of "freebies' from the government lets say that adds up to another $6,000 per year. So, here we are at $45,500.

This gives us a delta of about $30K between the working "poor" and the "wealthy". That's a lot of long hours and hard work for $30K.

We can argue about the exact numbers but the idea is that the "wealthly" will not long suffer under this type of tax policy. They will simply stop working so hard,they won't start new businesses or they will move outside the country. Why would anyone want to run a business or try to improve their wealth under these conditions?

What happened to the American dream? The government has turned it into a nightmare.

Chris P. Bacon
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Marginal tax rates

You've made a common mistake and applied the HIGHEST marginal tax rate to the entire $200,000.

Based on historical data, a top marginal tax rate of 50% equates to an effective tax rate of somewhere between 25 to 27%. The 6% GA tax is offset by Federal deductions so let's call it roughly 4%. That equates to a TOTAL tax rate of 31% (worst case scenario, to make your numbers look better).

$200,000 * (1 - .31) = $138,000.00 take home pay.

Most people would say there is quite a difference between $45,500 and $138,000.

PTC Observer
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Chrisp - Get

Get out your Turbo Tax when we are at your 50%, then get back to me on this.

I think you are wrong but the fact remains that higher taxes won't help create a sustained economy. It will shift money from individuals to the government. The government doesn't do anything well, it doesn't even collect taxes well.

Fact is the tax code is screwed up badly and we need to fix it.

Unfortunately, we only have those that benefit the most from higher taxes writing the tax code, government workers.

Observerofu
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That is what progressives like Bacon want

To all be equally miserable you know like him.

Wealth must be eradicated, unless you are the ones in power, so that their utopia can become real.

The progressives learned well from Cloward and Piven. Got to overload the system so they can restart it the way they believe it should be.

I guess communes will be back in style soon.

normal
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IRS's 'hard-core' collection tactics needlessly harm taxpayers,

The Internal Revenue Service's increasing use of "hard-core" collection tactics "is inflicting unnecessary harm on financially struggling taxpayers," an in-house critic at the IRS said Wednesday.

The IRS routinely imposes liens on delinquent taxpayers, thereby damaging their credit scores and potentially jeopardizing their access to jobs, insurance and even rental housing, National Taxpayer Advocate Nina E. Olson said in an annual report to Congress.

By making it harder for taxpayers to get back on their feet, the IRS might actually reduce long-term tax collections, Olson wrote

I would gladly pay mega sales tax, I therefore have the choice if I want to pay. This way they just take it and piss it away on waste. And it is not 50 to 70% you moron.

borntorun
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Normal: IRS and Hard Core Tactics

Hard core? I'm not here to praise or defend the IRS but the IRS by law cannot "routinely" impose liens on delinquent taxpayers. Before that happens there are numerous notifications of the debt from the IRS to the delinquent taxpaye and numerous attempts to satisfy the debt including setting up repayment schedules within the delinquent taxpayers ability to repay.

They are also required by law to issue an intent to fifa notice to the delinquent taxpayer before an actual lien or fifa is issued. This gives the taxpayer an opportunity to contest the amount owed or enter into some kind of settlement with the debt. In 99% of the cases where a lien is issued, the taxpayer has ignored or refused to work with the IRS when a lien is issued.

And I'm sorry, while nobody including myself likes to pay taxes, I do pay my taxes. I have no problem with those that don't being dealt with appropriately and as prescribed by law. I have more of a problem with WHERE my tax dollars go.

Fair Tax? I guess that depends on where you are on the socio-economic scale. Obviously a family of four making $100,000 per year can afford to pay a consumption tax easier than a family of four making $25,000 per year. The family making $100,000 would have far more discretionary income than the family making $25,000 per year. A consumption tax could also have a negative impact on the elderly and retired folks living on a pension.

One other thing to consider with a consumption tax. When times are good and folks are buying like crazy, no problem. But when times are bad and sales are in the toilet, not so good. Indeed, some economic projection models show that a consumption tax could have a negative impact consumer consumption. That has been the argument for property taxes. Much more steady and less volatile revenue stream. But of course, with the real estate market being what it is, that is no longer the case.

Observerofu
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IRS abuses

http://www.irstaxattorney.com/irs_abuses_irs_tax_attorney.html

Just a little info for those that think the IRS is a benevolent organization.

Observerofu
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IRS and the Progressive Tax must go to the scrap heap of history

Rather a Fair Tax or Flat Tax either would work for me. This 60k+ page monstrosity that even the IRS can't figure out is draining our society.

JeffC
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60K+ pages OOU?

Typical exaggeration!

Actually, I got called using that 60K number too and had to look it up. The entire tax code as printed by the GPO in 20 volumes is a mere 16,845 pages. Be assured that each page has been cleverly crafted by your elected representatives to be clear, unambiguous, and easily complied with. And contrary to the claims by you government bashers, I am sure that the entire code has been scrutinized so that there are no contradictory factors to be considered when filing your taxes. Our elected representatives would never be so derelict in their duties so as to let that happen.

The IRS also points out that the vast majority of the tax code is specific to different industries (a nice way of describing the loopholes) and that the average taxpayer with a job, children, and investment income is covered entirely in only 2764 pages.

I read in the Economist that one of the countries in Europe has an entire tax code that is 26 pages long.

roundabout
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Arguing tax codes!

Work on exceptions to the tax code (any one) start the day it is passed.

A simple 23-30% "Fair Tax" code would also be modified in every congress and also have 16,000 pages someday! The code as written now (fair tax) has changes built into it---the percentage of sales tax changes every year depending upon what was spent in the past year!

Even municipalities have a "safety net" for falling property values---if values go down so that tax on property goes down, they simply raise the millage rate.

As long as conservatives can get elected by speaking about low taxes and balanced local and state budgets, they will do so--even though if it were not for the federal government supplying a significant portion of their budget to the states, most states would be broke!

Yet, believe it or not, these same state politicians who want the taxes reduced are the very ones who want, and take, federal tax money from the federal government every year!
The most conservative voters in Fayette County want that federal money for teachers, cops, firemen, roads, bridges, dams, etc., will preach to the choir the next day to reduce taxes!

HHHHHHHHHHHHHHHHHHHH!!!

Observerofu
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JeffC yes it was an exaggeration

notice I did not post a link to "prove" it either. It was a frustrated response and should have been taken tongue in cheek.
There is actually around 8k plus supporting addendum's.

However your 2764 is correct only if the pages are really, really long...

"The complete Internal Revenue Code is more than 24 megabytes in length, and contains more than 3.4 million words; printed 60 lines to the page, it would fill more than 7500 letter-size pages."
http://fourmilab.ch/uscode/26usc/

Better now?

Joe Kawfi
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From the mouth of a lib

"mere 16,845 pages" "only 2764"

Only a typical clueless big government lib would use words lik "mere" and "only" with numbers that large.

hutch866
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And yet Joe

Unlike you, Jeff has never lied on these boards, and about something so inconsequential.

Joe Kawfi
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Oh Hutch

You poor, poor, miserable little pissant. Why don't you grow up?

JeffC
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LOL Hutch

Some people have no sense of humor. Is there anyone besides Joe that didn't recognize the sarcasm?

Gort
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Hey, Pa! Yeah Ma? Them's

Hey, Pa! Yeah Ma? Them's Hutchfields and MacKawfi's are feuding again. You better bring home the milk cow. Okay Ma, soon as I finish taken my nap.

Chris P. Bacon
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JeffC, tax code length exaggerations

Exaggeratin' the length of the Federal Tax code is a staple of the fringe right wing.

There's actually a web page devoted to right wing politicians estimating the length of the tax code.

normal
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Yes get rid of the terrorists

Fair tax is a must, Put the KGB work force at the IRS on unemployment.

Davids mom
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My New Year's Resolution

Spend more time reading the activities of Congress and less time reading the 'blogs'.

Real all opinion pages of ALL media - to try to get a handle on the 'truth'.

Put my money where my mouth is - and support causes that benefit the American people - not necessarily a political party.

To watch carefully the 'Tea Party' legislators. Are they working for a 'party' or for the American people?

Anyone else make any resolutions?

It was hard to keep last years - not engaging in 'petty' arguments. But although I didn't keep that 'promise' throughout the year - some improvement was noted.

This Congress opens today. I think we're in for a 'wild ride'.

Georgia Patriot
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DM
Davids mom wrote:

Spend more time reading the activities of Congress and less time reading the 'blogs'.

Real all opinion pages of ALL media - to try to get a handle on the 'truth'.

Put my money where my mouth is - and support causes that benefit the American people - not necessarily a political party.

To watch carefully the 'Tea Party' legislators. Are they working for a 'party' or for the American people?

Anyone else make any resolutions?

It was hard to keep last years - not engaging in 'petty' arguments. But although I didn't keep that 'promise' throughout the year - some improvement was noted.

This Congress opens today. I think we're in for a 'wild ride'.

The so called "Tea party" legislators better work for the people that elected them, otherwise they will get to be a part of the next "shellacking". Jan 5th, 2011 the day Restoration of America and Constitutional Government begins (to be continued 2012). -GP

Davids mom
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GP

I think we're on the same page here. Watched the opening of the new Congress today. We'll see. This is going to be an interesting year.

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