Category: Taxes

House Ways and Means Tax Reform Subcommittee Wednesday, February 22, 2017 Testimony of Kelly McCutchen, President, Georgia Public Policy Foundation  I would like to focus on four positive aspects of HB 329. Pro-Growth: An almost universally held principle of good tax reform is the goal of broadening the tax base and lowering tax rates. This bill does both. Simplification: This bill simplifies the Georgia Tax Code by collapsing six tax brackets into one flat rate. Economic Competitiveness: Lowering Georgia’s top marginal tax rate to 5.4 percent moves Georgia’s rate below that of seven states, including our neighbor North Carolina, which recently reduced its top tax rate of 7.75 percent to a flat rate of 499 percent.… View Article

Tough Choices on Tax Reform for Georgia

By Kelly McCutchen Tennessee just became the second state in U.S. history to eliminate its personal income tax. Florida and Texas do not have a personal income tax. With Georgia’s unsuccessful attempts over the last decade to shift to a more pro-growth tax structure by lowering its personal income tax, it’s worth asking the question: How do these states manage it? Do they spend less? Do other sources of revenue make up for lower income taxes? Or is it something unique that Georgia can’t duplicate? Georgia’s personal income tax brings in more than $8 billion a year, or $878 per capita. The challenge is to identify $878 per capita of spending cuts or other revenues to make up the difference.… View Article

Guide to the Issues: Tax Reform

Principles: Minimize the impact of taxes on economic growth. Taxes are necessary to fund core government services, but every additional dollar of taxes is a discretionary dollar taken away from a family. A decision to raise taxes is an explicit decision that a government program has a higher priority and importance than individual decisions. The private sector is the source of all wealth, and is what drives improvements in the standard of living in a market-based economy. Taxes should consume as small a portion of income as possible, should not interfere with economic growth and investment and should not place the state at a competitive disadvantage. Limit exemptions to encourage a broad tax base and low rates. Exemptions shift the… View Article

Don’t Buy Tax-Free Weekends

By Scott Drenkard and Joseph Henchman Sales tax holidays are periods of time when selected goods are exempted from state (and sometimes local) sales taxes. Such holidays have become an annual event in many states, with exemptions for such targeted products as back-to-school supplies, clothing, computers, hurricane preparedness supplies, products bearing the U.S. government’s Energy Star label, and even guns. In 2016, 17 states will conduct sales tax holidays, down from a peak of 19 states in 2010. Georgia’s back-to-school sales tax holiday takes place July 30-31; the two-day holiday is expected to “save” Georgians up to $74.5 million. The list of tax-exempt items is here.  It includes clothing and footwear costing $100 or less, school supplies costing… View Article

Tax Reform A Needed Boost for Georgia’s Economy

The Senate voted along party lines March 16 on tax reform for Georgia. By Kelly McCutchen The Georgia Senate deserves a hearty congratulations for approving a pro-growth tax reform Wednesday (March 16) that would reduce Georgia’s marginal personal income tax rate for the first time since it was implemented in 1937. To be the best place to do business in the nation, Georgia needs a more competitive tax code. In the Southeast, only South Carolina’s top income tax rate of 7 percent is higher; nationally, 28 states have lower marginal rates. The proposed income tax changes can be explained in less than a minute. Georgia’s six tax brackets would be collapsed into one tax bracket of 5.4 percent (a reduction… View Article
The Georgia Senate voted Wednesday to approve a pro-growth tax reform that would reduce Georgia’s marginal personal income tax rate, the first change since the rate was implemented in 1937. Final passage depends on the House agreeing to the Senate’s changes to the bill and the Governor’s signature. The arguments from opponents of a tax cut range from weak to unfounded; the Georgia Public Policy Foundation rebuts them below. Claim: Tax Reform Needs More Comprehensive Study Tax reform has been studied comprehensively and debated extensively for at least six years. Large corporations have benefited from some reforms but families and small businesses have seen little change.  Just in the past 24 months, the legislature has held at least six hearings… View Article
As Georgia legislators consider tax reform legislation, consider what happened in Kansas.  Writing in Investor’s Business Daily on February 1, 2016, Arthur Laffer and Stephen Moore note, in particular, “sales tax revenues appear to be the prime culprit of revenue shortfall—hardly something caused by an income tax cut.” The article is printed below; access it online here (subscription required): http://www.investors.com/politics/brain-trust/laffer-and-moore-sweet-supply-side-revenge-for-tax-cutters-in-kansas/. By Arthur B. Laffer and Stephen Moore Few states have swirled in more controversy over its tax and budget policies of late as much as Kansas. Liberals have denounced the state’s tax cutting and free market reforms as a debacle that all states should avoid repeating. But we’ve been involved with the Kansas fiscal reforms from the start and… View Article

Analyzing the Latest Tax Reform Proposal

Senate Finance Committee Chairman Judson Hill recently introduced two tax reform bills. The first proposal would replace Georgia’s six tax brackets with one tax bracket of 5.4 percent (a reduction of 10 percent from the current top rate of 6 percent), increase personal and dependent exemptions by $2,000 each, and eliminate itemized deductions other than charitable deductions, medical expenses and up to $25,000 of mortgage interest. In addition, the corporate net worth tax is eliminated. [Update: Analysis of this bill by the Tax Foundation indicates it would improves Georgia’s ranking to 18th overall on the State Business Tax Climate Index, up from the current ranking of 39th.] The second bill, a proposed constitutional amendment, would reduce the personal… View Article
SENATE FINANCE SUB-COMMITTEE ON TAX REFORM MONDAY, NOVEMBER 9, 2015 Testimony of Kelly McCutchen, President of the Georgia Public Policy Foundation My remarks will focus on tax policy principles, analysis of two recent state tax reforms, myths associated with tax reform and suggestions for a way forward for Georgia. Tax revenue is necessary to fund core government functions. The goal of tax policy is to raise those necessary funds while minimizing the impact on economic decision making. Surprisingly, there is broad agreement from economists across the political spectrum on what constitutes good tax policy. This can be very simply stated as: 1) broadening the tax base and lowering rates, 2) not applying the sales tax to business inputs and 3)… View Article

Georgia Gas Tax Hike: Much Ado About Nothing

By Clay G. Collins and E. Frank Stephenson  One of the most significant bills enacted by the Georgia Legislature in 2015 was the nearly billion-dollar Transportation Funding Act of 2015 (HB 170). A key provision of the bill was a change in Georgia’s gasoline tax, taking effect on July 1.  Before the change, Georgia had a two-part gas tax: a 7.5 cents per gallon excise tax and a 4 percent state sales tax. Gas was also subject to local option sales taxes, which run another 3 percent in most counties. Levying gas taxes as a percentage of the purchase price had drawbacks. One was difficulty in transportation planning because tax revenue fluctuated with gas prices. Another was the perverse feature… View Article

“I am here today to thank the Georgia Public Policy Foundation for your role in building a fiscally conservative, pro-growth state. Not only did you help pave the way for a new generation of leadership, you continue to provide key policy advice and to hold us accountable to the principles we ran on. In short, you have had a transforming influence on this state. We are healthier, stronger, and better managed because of your efforts.

State Senator Eric Johnson, President pro tempore, Georgia State Senate more quotes