Georgia tax plan: The good, the bad and the unknown

March 21, 2012 

The Devil, as the saying goes, is in the details. In the case of the tax overhaul proposed by Georgia lawmakers, Old Scratch has not yet shown his face.

There are things worth commending in the plan unveiled Monday by the Republican legislative majority, most prominent among them the fact that the repugnant proposal to impose a sales tax on food has apparently been deep-sixed, at least for this session. Whether the idea of paying for high-end tax breaks out of the pockets of the working poor was abandoned for purely political reasons or because of a belated attack of collective conscience, we're relieved at the outcome.

That's by far the best omission from the tax plan. Among the best inclusions is reinstatement of sales tax holidays in August and October for education supplies and energy-efficient materials. That's a win for both consumer finances and the greater good.

Also proposed is an increase of between $1,000 and $2,000 in the exemption married couples could claim from state income tax. That cost would be offset in part by lowering the cap on income retired Georgians can shelter from state taxes. That cap, which would have increased to $200,000 by 2015, would be set at $65,000. That figure might be open to debate, but taxing six-digit incomes should certainly not be off limits.

Property tax on cars and trucks would be phased out, and this part of the plan seems to have been thought through as fairly as possible: Any vehicle purchased after March 1, 2013 would cost the buyer a one-time fee, to be capped at 7 percent, based on the vehicle's value.

The plan's most obvious downside -- apart from the usual special-interest sweetheart deals, including renewal of the multimillion-dollar fuel tax break for Delta -- is that nobody seems to know how the already money-strapped state is going to pay for it. Georgia State University economists estimate that the plan will create a $50 million deficit, in a state where deficit spending is constitutionally prohibited.

Even the plan's chief sponsor, Sen. Don Balfour, is fuzzy about where that $50 million will come from. He did say the cost of the tax breaks could be smaller, and that "growth" -- that familiar magic beanstalk of targeted tax cuts that is supposed produce the beans to pay for them and every now and then actually does -- might help.

Let's hope so, but that's not good enough. House Minority Leader Stacy Abrams, D-Atlanta, raises the obvious question: "How do we fill that hole and what priorities do we sacrifice?"

Even without the food tax, the too-easy solution would be to squeeze more from the politically powerless, either with regressive taxes or through cuts in programs that affect those with the least clout to resist.

The Georgia Constitution says the state's budget must be balanced. Georgians need to know at whose expense.

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