Georgia needs common sense tax reform

Virgil Fludd's picture

This summer, Georgia’s Special Council on Tax Reform and Fairness for Georgians began its five-month mandate to examine our state’s tax code and recommend a path forward.

With their mission nearing completion and taxes becoming a key election-year issue, I believe the Council must focus its energies on long-term and sustainable solutions for a healthy fiscal future.

The most important thing the Council must consider is sustainability. Our state’s economy is struggling, unemployment continues to hover around 10 percent, and the blame for this cannot be placed fully on national economic problems.

Indeed, our state’s economic problems were all too obvious even before Wall Street took a nose-dive in 2008. The most significant problem: A lack of sustainable budget planning.

Our state’s tax code, in whatever new form it eventually takes, must be relevant and fruitful today, ten years from now, and into the next generation.

There are a number of good ideas that can save our tax code, provide the necessary revenue to help our state grow, and, most importantly, keep taxes low for working Georgians.

First and foremost, we must change our sales tax collections policy, an idea I first introduced in 2009.

Currently, when you pay sales tax on, for instance, a new toaster, the state collects that sales tax and then, a month or more later, sends your county’s share back. Not only is this inefficient, it also creates a bureaucratic monopoly for the Department of Revenue as the only entity that can collect sales taxes.

My proposal is much more sensible – simply give county governments the right to collect sales taxes locally, either by doing it themselves, outsourcing that work to a private sector business, or allowing the Department of Revenue to continue collecting revenue in that county.

My proposal not only makes the system more efficient and gives counties a choice in how they run their affairs, it also raises more revenue without raising taxes one dime.

Every year, the Department of Revenue leaves hundreds of millions of dollars on the table in the form of uncollected sales taxes. In states where private sector firms have a hand in collecting sales taxes, this isn’t a problem, and I believe that until we change the outdated way in which sales taxes are collected, we continue to cheat ourselves out of sales taxes that you’re paying, but which fall through the cracks.

Beyond reforming sales taxes, we also desperately need income tax reform. Plainly put, our income tax brackets haven’t been significantly updated since the 1930s. It’s time to have the political courage to change that.

If we were to raise the rate by just 1 percent on people making over $1 million per year, we would bring in millions more to the state’s strapped coffers, while reducing the tax on nearly 90 percent of our working families.

Finally, we need to simplify our corporate tax system, and make certain that it protects and prioritizes small business owners. Healthy small businesses are vital to a healthy economy.

I suggest that, instead of throwing away millions of your dollars on tax breaks for huge out-of-state corporations, we instead invest that money in helping small businesses get a break on their taxes.

Along with that, we need to carefully and thoroughly audit the corporate tax breaks already in place, to see if they’re actually creating jobs and capital investment, or just costing us money we don’t have. We need to get rid of the ineffective ones and expand the revenue-enhancing tax breaks.

The truth is, Georgia’s tax system is broken, and it has been for a long time. The last few years of myopic and selfish budgeting haven’t helped matters, and now our state is at the precipice of financial catastrophe.

Only sound, common-sense, and sustainable policy can pull us back from the brink.

[Rep. Virgil Fludd (D-Tyrone) serves in the 66th House District. District 66 includes parts of Fayette and Fulton Counties in south metro Atlanta. He serves on the Banks and Banking, Regulated Industries, Small Business and the Ways and Means Committees. Rep. Fludd is also Chairman of the Fayette Delegation and Co-Chairman of the Working Families Caucus.]

TeaPartyWarrior
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Soak the Rich

Cutting taxes is what increases revenue. A representative that singles out a certain class of people is not really representing "fairly", as they like to say. Why stop at 1%? Why not 10%? I mean its the rich and they have enough money anyway right?

The entire premise is wrong! How about cut spending? How about controlling waste? How about not spending millions upon millions expanding a transit systems that loses money. These tired tactics never work. We need representative that unite not divide us. Any politicians that talks about raising taxes on anyone right now needs to be run out of office. Please Mr. Fudd give us all an example where a society has taxes their way into prosperity? Wake up people, don't fall for this class warfare garbage!

lion
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TeaPartyWarrior

"Cutting taxes is what increases revenue." This is like believing in Santa Claus. We can spend less at Christmas time because Santa brings (at no cost) the gifts under the tree.

Give me some examples of Federal spending you want to cut. What transit system are you referring to? If it is MARTA, that system does not get any State or Federal funds.

What Federal spending would you like to cut? Social Security, Medicare, VA benefits, National Parks, cancer research, NASA, Department of Defense, farm subsidies, aid to small businesses???

By the way, President Obama and the Democrats gave a tax cut to Americans. Do you remember that? So did we see an increase in revenues as a result?

NUK_1
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Here's some starting places to cut and gut

Tax cuts are great when they are paid for by a same of higher decrease in federal spending. That's the basic principle of the Laffer Curve, a concept never tested in the US despite the howls and hysterics from a bunch of people without a clue on economics.

Tax cuts that simply add to the Deficit Monster are simply a very selfish way to have our cake and eat all off it so future generations get not only no cake, but are instead charged for the cake we ate decades before. Sounds like our elected "leaders" there.....

Here's my list of things to cut(not eliminate but CUT) at the federal level in order of priority, not that you asked:

Foreign Aid(military and humanitarian)
Agribusiness/Farm subsidies
Drug enforcement and interdiction
Homeland Security and TSA
Dept of Defense/Military budgets
Social Security and Medicare
Congressional pension plans + benefits
NASA
Aid(mainly grants) to states and local municipalities for law enforcement

PTC Observer
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NUK_1 - I can

agree with these and here are a few more, most should be cut and many simply eliminated.

http://en.wikipedia.org/wiki/List_of_United_States_federal_agencies

The fact is the government is too big.

Courthouserules
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NUK

What does that add up to, approximately? Is it over 2 trillion?

You want to cut the aid to Israel and Egypt? Then we will have to open a Fort in the Middle-East!

Food will skyrocket with agri cuts.

Defense, huh?

Social security and medicare? Has been cut about 10% recently, more to come. Hope you don't ever need it!

Yeah congress will vote to reduce their pensions, right!

States cut for education, cops, firemen, roads, bridges, ? Lotta layoff there.

Chris P. Bacon
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Nuk, I commend you

Nuk, I admit to having an almost visceral loathing for the garbage that passes as "libertarianism" here in Fayette county.

You, sir, are the shining exception. You are the rare Libertarian that is not afraid to state the obvious: in order to balance the federal budget, and keep taxation rates fairly close to what they currently are, we're going to have to make cuts....deep cuts...in both the military budget and in social security/medicare. Virtually every single other cut in your list is essentially window dressing from a financial standpoint.

I just don't see cutting Social Security and/or Medicare as politically viable solutions.

NUK_1
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CPB: Not politically viable

Those ideas are why the LP gets around 2% or so(or less)in Prez elections. While some of the TP fervor has some libertarian roots, I'm not holding my breath waiting to see if any ideas like that are seriously pursued once those candidates get elected, IF they win.

I haven't seen anything from the vast majority of Repubs that make me think they'll ever aggressively follow up either. Cutting military spending to them is WAY off the table, but giving out tax cuts that are unpaid IOU's is A-OK.

People want tax cuts? Hell, who doesn't? Maybe Warren Buffet doesn't care, but I think most would enjoy less taxation. So......how do you pay for them? The days of deficit spending look about over so if you want tax cuts or even to just maintain the level they are currently at, it means cuts have to be made.

I guess there is another argument that could be made that government could increase "revenues" by legalizing and then taxing the hell out of things like gambling, weed, etc., but that's another issue for another time :)Besides, once the euphoria of all that new tax money and new freedoms wears off, the gamblers and pot smokers are going to bitch about how much taxes they are paying for their vices :)

lion
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Nuk-1:cut and gut

Thanks for spelling out your priorities for cutting spending.

Most Tea Party conservatives never get into specific areas to cut the Federal budget. They prefer to deal in simple generalities.

I doubt that any conservative Republican candidates would dare run on a platform that included your proposed cuts.

Courthouserules
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TEA "Warrior"

We would need about three trillion dollars cut to balance the budget AND PAY ANY SIGNIFICANT amount on the debt.

There aren't that many places to cut it! Social Security; pensions; K-college aid; roads, dams, bridges, water conservation, pollution; and a few miscellaneous.

Defense---no; debt payments---no; NASA---really?; Teachers, cops, firemen---OK with me; anything else cut means all those would then would be unemployed! (run it up to 25% maybe.)

Take your pick and no one is interested in nitpicking bookmarks, etc.

Ninja Guy
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Outsource Defense

We should cut the defense department and outsource protection of the homeland to the Chinese. Can you imagine how hard they would fight to keep us, their largest export market, fat and happy?

Courthouserules
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Ninja

We already have outsourced 50% of our military!

The new leaks this week idicate as many contractors as there are soldiers in middle-east---they get triple as much pay!

Georgia Patriot
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SUPPORT THE FAIRTAX
Cyclist
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They're going to "flub" this up!

And what the state congressman is not telling us is that while his ideas might bring in bring in "hundreds of millions more to the state’s strapped coffers', funding for state pensions will need to increase by $6 Billion from this year to 2014.

AtHomeGym
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Cy & Flubbing

Of course they will. Look, the legislature was able to find MILLIONS for Sonny's stupid "Go Fish GA" program but can't find the money to fix Trauma Centers and want to tag vehicle owners with that responsibility. Can anybody 'splain that to me?

Spyglass
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Fludd, what do you propose we CUT?

Let's hear it. Got to be something.

PTC Observer
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Rep Fludd - Taxes

Unfortunately anytime a politican starts talking about "tax reform" it is just code for screwing the citizens a little bit more.

If you want to reform taxes start eliminating them one by one and start downsizing our bloated State government.

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