This morning the conservative Tax Foundation released its comprehensive analysis of state tax structure policies that impact business growth. The message for Georgia: We Can Do Better. Georgia is ranked No. 34 nationally, unchanged from one year ago. Georgia lawmakers continue to struggle with how to enact comprehensive revenue neutral tax reform.
The Tax Foundation annual report compares states against each other in five tax categories: corporate, personal income, sales, unemployment insurance and personal property. Georgia collects all five; some states do not. With no personal income tax, Florida ranked fifth nationally. Three states have no personal or corporate income taxes. Some states impose no sales tax.
The Tax Foundation wrote, “The lesson is simple: a state that raises sufficient revenue without one of the major taxes will, all things being equal, have an advantage over those states that levy every tax in the state tax collector’s arsenal.” The Foundation ranked Georgia ninth best for corporate income tax, 12th for general sales tax, 22nd for unemployment insurance tax paid by employers, 39th for personal property tax and 40th for individual income tax.
The Tax Foundation said ten southern states rank ahead of Georgia: Florida (5), Texas (9), Tennessee (14), Missouri (15), Mississippi (17), Alabama (20), Kentucky (22), West Virginia (23), Virginia (26) and Louisiana (32). (By virtual of editorial discretion Missouri is included here because next year it plays Big Boy Football in the Southeastern Conference.) Only South Carolina (36) and North Carolina (44) finished lower than Georgia among southern states.
It would be somewhat surprising if the General Assembly does not agree this year to eliminate the sales tax on energy used in manufacturing. All the momentum is in that direction. Governor Nathan Deal made it a priority. He also wants sales and use tax exemptions for construction materials used in what the Governor has described as “projects of regional significance.”
Much less clear is whether the Georgia Legislature can agree on changes to general sales and personal income taxes, which likely would be tied in a revenue neutral conversation. The state unemployment taxes structure is perhaps the thorniest briar in the patch.
Georgia has borrowed $721 million from Washington since December 2009 to help pay monthly unemployment benefits. Here is some additional perspective on that number; Georgia’s emergency fund is $328 million, less than half the amount owed to the federal government for unemployment compensation loans. This year Georgia will also make a $33 million interest payment that will not reduce the principal amount.
Unemployment insurance benefits are funded by taxes on employers. States set tax rates and they determine the maximum taxable wage base. Georgia’s maximum tax rate is tied for lowest in the country and the wage base is almost lowest in the country. More taxes paid by Georgia businesses and reduced unemployment benefits are both possible this year.
The Tax Foundation said last year the index was downloaded 487,000 times, cited in hundreds of news reports and mentioned by four governors in their State of the State addresses. Here is a link to the 2012 Tax Foundation business tax climate index report.
Georgia Tech: “This Time We Are In The Room”
Georgia Tech’s Michael Meyer was understandably still pretty excited when we spoke this week while he attends a conference in Washington, D.C. Meyer will coordinate the Georgia – Florida – Alabama, ten-university national transportation research center housed at Tech’s School of Civil and Environmental Engineering.
“I’ve been at Georgia Tech for 23 years. When we won the (regional) transportation center four years ago, that was a foot in the door to let folks know we really are good at what we do,” Meyer said. “This time we are in the room. I’m at this conference and everyone up here is basically saying, Georgia Tech was the big winner.”
The $7 million public-private partnership brings together seven Georgia universities plus two from Florida and one from Alabama. The project focus will be on transportation infrastructure, safety and economic development from more than just a local perspective. That means best business practices to reduce fatalities, how to evaluate infrastructure priorities and much more.
Meyer posed his own questions: “How do we define success. Is it the amount of vehicles or people who can be handled? Is it the level of satisfaction or the level of dissatisfaction? What we have to offer is a national and international perspective on what has worked or not worked elsewhere.” Atlanta HOT lanes – subject of recent debate – will be on the table for review.
Meyer said the immediate challenge will be coordinating researchers from the ten universities and designing their unique projects. He noted Georgia State has an expertise in finance while the two Florida schools – Central Florida and Florida International – are noted for research into how people respond when they use driving simulators. The project is funded for two years with half from a federal grant and half in matching funds. The Woodruff Foundation stepped up with $300,000. “Woodruff was a fantastic shot in the arm,” Meyer said.
The Foundation should take a lot of pride in your influence on Georgia governmental policy over the past several years. If you look back on several things that you were crying in the wilderness about several years ago, you will find that Governor Miller adopted them…your influence and your pressure on that process has been a major factor in governmental policy in Georgia. You should be congratulated.