Jul 28, 2014

Tax Reform Headed Our Way

But is "reform" a code word for tax increase?

Last week in the Georgia House of Representatives, the long awaited tax reform policy was unveiled. The policy was crafted last year by a special panel of businessmen appointed to recommend sweeping changes to the tax code in Georgia.

Some of the recommendations made by this elite panel of experts included, but were not limited to, increasing the taxes on cigarettes, adding sales tax back to groceries and placing a sales tax on certain services that have not formally been taxed, such as hair cuts. As soon as word began to leak about the increased tax on cigarettes and the possibility of groceries being taxed, there was uproar from distributors and citizens alike. Those two items were quickly snatched from consideration after Gov. Deal signaled he would veto the bill if those proposals were part of the package.

As this policy was in process of being hammered out, it was covered under several different bill numbers - HB 385-388 - and ultimately grew to more than 129 pages of legislative speak and spin. The final (at least for the time being) bill is listed under the number HB 387 and is 69 pages thick. Every taxpayer in Dacula, Gwinnett County and across our state will be hit by sweeping changes in the tax code.

The overall tax rate is being changed downward from 6 percent to 4.5 percent. This 1.5 percent reduction is the backbone of all the other parts of the bill. The reduction in the tax rate has been compared to the Reagan tax rate cuts of another generation. This rate adjustment is being used as evidence that jobs will be created, people will have more money in their pockets and the prosperity cycle we have all wanted will be ushered back into our state.

There is an overall different view coming from some people when they look at this legislation and see that alongside this state income tax is inclusion of consumption taxes. As an example, in this bill there is a newly imposed sales tax when a private sale of vehicle has occurred even among family members. There is also a change in the way deductions will be factored into the structure. For married couples filing together, all deductions for non-business transactions are allowed up to a maximum of $17,000. Those non-business transactions include what we have known as home mortgage, charity, church giving and other currently allowable deductions which will no longer be allowed once the $17,000 cap has been reached for married couples or $8,500 for a single person.

Some lawmakers have argued that with more money in pocket, people will give more to charity and church. Other lawmakers have let it be known they cannot bow to special interest groups in putting together this tax policy. From where I stand, the bowing to special interest groups seems somewhat disingenuous when the cigarette special interest groups had already won their fight to not increase their taxes, but when church folks ask for consideration they were rebuffed as trouble makers.

It remains to be seen if new jobs will be created as a result of this bill or if there will be increased giving to charity and churches that will once again place our state in a prosperity cycle.  

To voice your concern about this sweeping tax reform policy, contact State Rep. Donna Sheldon (R-105) at donna.sheldon@house.ga.gov or by calling 770-963-5472. You can reach State Sen. Renee Untermann (R-45) at renee.unterman@senate.ga.gov or by calling 770-945-1887. Do not wait until this legislation has passed to make your voice heard.

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