Erick Erickson at Peach Pundit has posted a podcast interview with state House Speaker Glenn Richardson. Most of the interview focuses on the tax reform plan he plans to push in the next session, which would replace property taxes with a statewide sales tax.
Many people, including me, have criticized the plan as a power grab. As it stands, property taxes are collected by local governments to fund education and other things. Under this proposal, that collection mechanism would go away and revenue would be collected by the state, and the state would have discretion over redistribution of tax revenue to local governments. Since the Georgia Constitution says all revenue bills have to originate in the House, that places a lopsided level of power in the hands of the House.
House Rules Chairman Earl Erhart (the second most powerful leader in the House) has said under this proposal the state won’t take graft off the top in during the collection process, and that all revenue would be returned to local governments. However, Erhart has already acknowledged it’s possible that the state could change its mind at any time.
Here’s a money quote from Richardson in the the interview (emphasis mine):
“When you change to a different system, a consumption-based sales tax, you have to have a different way of distributing that money. But we’re exploring every available option to make certain that local government is still secure, that we’re not taking away their ability to tax or spend. I know they guard that power to tax very diligently. But you have to also remember that their power to tax has been used at a rate about 30 points higher than personal income has raised in Georgia in the last 15 years. So maybe a tad of a check is not all bad, but essentially this is not designed to check local government, but simply to have a different system of taxing and funding local government.”
Already, he’s thinking about playing dictator.
I wouldn’t trust this guy to tend the concession stand at a Little League game, much less to gut the entire tax structure of a multi-billion-dollar state government.
Interesting money quote, there. That may be one of those “damn lie” “apple-orange” statistics.
And let me stress “may.” Because I don’t know what he’s referring to.
Does he mean tax revenues went up faster than gross domestic income, or does he mean tax revenues went up faster than gross average income?
If it’s the former, then it may be a fair comparison, depending (at the very absolute least) on the burden of federal unfunded mandates. These mandates have grown over the last 15 years, and they would certainly justify some rise in tax rates. The question is, how much have Georgia’s rates grown as a result of unfunded mandates, compared with other states?
If it’s the latter, then that’s a very unfair comparison because Georgia’s population grew tremendously over the last 15 years. Growth in average income is different than growth in gross income. And it would be fair to ask for a clarification from Mr. Speaker about what sort of comparison he’s really making.
We also seem to be ignoring the pandering issue.
Property taxes directly affect property owners, who are much more likely to have wealth and influence than renters and who are thus a more valuable constituency.
Despite the fact that taxes levied on rental properties would go away I doubt that renters could expect rents to decrease significantly. The owners of those properties would simply pocket most of the difference.
The Speaker’s tax plan amounts to giving all property owners in the state an annual boost in personal income equal to their current ad valorem tax bills. People who own property in smaller communities, with lower tax bills, under a thousand dollars, with get that much. People who live in metro Atlanta, who pay much larger ad valorem bills, will get much larger breaks. I own a house in a rural town, and pay city and county combined taxes of less than $500. I also own a comparable rental house in Atlanta, where I will pay about $6000 in ad valorem taxes this year. Do the people of GA really want to give this level of fat tax breaks to the people of metro Atlanta?
What is everyones thoughts on the Fair Tax??
Preston,
I think there are two separate discussions that need to be had when discussing Richardson’s tax proposal (which supporters call the GREAT tax, and detractors refer to as the GlennTax) or discussing the Fairtax.
The first is supporting a progressive vs. regressive tax structure, i.e. an income tax vs. a sales tax.
The second is local control vs. centralized control, both of which I believe to be fundamental, dealbreaker problems with both the GlennTax proposal and FairTax proposals independent of the first issue.
I think these proposals both run contrary to the concepts people support when they support a regressive tax, which is (in their eyes) more equitable taxation and simplification of the tax process (the latter of which, ostensibly, would lead to less corruption in government).
The problem with both proposals is that money is collected by a higher level of government (the federal government in the case of a Fairtax, the state government in the case of the GlennTax), and that government is given discretion to redistribute that money. There’s a middleman in the process that assures there will be as much corruption as there is in the current system, it will just come from a different direction.
I think even people who would support switching to a sales tax-only model should be very skeptical of these proposals.
The consumption tax???
Ah, the joys of having the North Carolina and South Carolina state line within 10 minutes of my Georgia left wing mountain shack.
Need a fridge? Dishwasher? Lowe’s is a 20 minute ride on the other side of the state line.
Up yours, papa hawk.
If Georgia Property Owners get a chance to do away with Georgia Property Taxes, the Referundum for the Constitutional change will overwhelming PASS!
What an economic boon to the State!
Bob,
Interesting that you said “economic boon to the State” and not “economic boon to the Taxpayers.” My thoughts exactly.
By Economic boon I meant for Property Owners, Business and many Georgians.
Completely for the proposed tax. As a property owner in a very rural county, I’ve seen taxes rise every year for the past 3-4 years. The new tax assessment raised land values an average of $500 an acre on the entire county. An elderly relative saw her farm value increase over 150K. The assessor says to be glad for your land is worth more; however, many folks don’t want to sell their land which may have been in the family for several generations. A sales tax is a much fairer tax. If the proposal comes up for a vote I will support it. Surprisingly, many of the “poor” renters and small property owners I’ve talked to support the idea as well. I agree there needs to be a fair allocation of the monies to all counties involved.
i hope i dont pay no more property tax,dont have no kids but why do i pay,isnt out goverment great,people who rent dont pay do they?am tired of paying everyones tax
All exemptions for 65 and over crowd will go away. The total taxes will increase for the elderly. That fact alone will kill this moronic plan.
Get read to pay LOTS MORE than you paid for your property tax bill. Especially, the elderly will get whacked. I know about Richardson… HE IS “SOMETHING ELSE.” 4 to 7% more… who knows? There is some helpful information on http://www.gaao.org that will show you how much you may be paying on GlennTax than you do for property taxes. Michigan is suffering now because of the same bill.
GlennTax would be very bad for Georgia retailers. You don’t pay sales tax for online purchases….so if Georgia sales tax went up to 10% or more, that would take lots of sales away from Georgia retailers.
Why not lower property taxes a little bit and raise sales taxes a bit and see what happens? To totally eliminate property taxes is a reckless experiment.
Is Glenn Richardson have any accounting or tax expertise? NO. He’s a political science major with a law degree. He may be able to figure out his six-figure salary at his law firm, or maybe the dues at the country club, or how much his girlfriend at Atlanta Gas Light is costing him, but taxes? NOPE.
If you’re a lawyer, with three houses, and a six-figure income, the GlennTax is like manna from heaven. If you’re a working family running the family hardware store or small business, this is millstone around your neck…you lose business and pay more for everything from your socks to your shampoo.