As printed in Sunday's AJC:
Atlanta Forward / Another View: State could become a national model
By Kelly McCutchen
Some may quibble with details, and adjustments will certainly be made, but enacting the Tax Council’s pro-growth tax reforms will make Georgia a national model and could not come at a better time.
The proposals would create a true flat tax on income and modestly shift revenues to a broader retail sales tax. Both income and consumption would be taxed at a low rate of 4 percent and the tax code would be greatly simplified. Targeted tax credits would protect low-income senior citizens and families.
Gov. Nathan Deal’s balanced budget requires no tax increase, clearing the way for the tax rate reductions to be implemented immediately.
Tax experts of all political stripes applauded the council’s guiding principles. The recommendations are right in line with these principles, something to remember as the howling of the special interests begins.
The plan makes the backbone of our economy — traditional industries of agriculture, mining, forestry and manufacturing — more competitive, but also positions Georgia in the “new economy,” where knowledge workers are highly mobile and can choose to live anywhere. The loss of these high-wage jobs is one reason why Georgia’s 10-year growth in per-capita income is next to last in the U.S.
Most small businesses, startups and other innovative companies pay personal income taxes, rather than corporate taxes. Cutting the personal income tax rate by a third will help these high-growth businesses expand and help us compete with states with no income tax.
The proposal takes into account the plight of the poor: Food stamp exemptions and tax credits would offset negative impacts. By comparison, Florida, Texas and Tennessee, which rely solely on higher property and sales taxes, offer no low-income tax credits. Concerns about regressive taxes should focus on the proposed 84 percent increase in tobacco taxes.
Allowing families to keep more of the income they earn is the right thing to do. The income tax is more of a tax on becoming wealthy than a tax on the wealthy, who have many ways to avoid taxes.
We should seize this opportunity for a broader, more efficient, more stable and faster-growing tax base that addresses long-term budget needs. A pro-growth tax code is vital to getting Georgia’s economy back where it belongs, and these recommendations are a major step in the right direction.
Kelly McCutchen is president of the Georgia Public Policy Foundation.