Wednesday, January 30, 2002
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Wednesday, January 30, 2002 |
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Local legislators show no interest in tax reform A reward might await some of the people who'll read these comments, in the form of a reduction in their Georgia state income tax (possibly a few hundred dollars), but that's not the point. The point, to put it succinctly, is that I fear the state of Georgia is cheating its own citizens, and our state legislators from Fayette County have regrettably shown no awareness and no interest in any of this, to our detriment. It might not be inappropriate to point out that the people of Fayette County have been smart enough to dodge the bullet, twice, on a school SPLOST, and have thus saved themselves a lot of tax money. School construction is currently proceeding apace in the county. Even though the bond issue we voted for in November 2000 did not include classroom additions to existing schools, we're witnessing a lot of construction there, too. As far as I can tell, our county property taxes have hardly budged from what they were. The school board is now all smiles, and the governor publicly touts the smartness of borrowing through bonds in a period of low interest rates. Welcome aboard, Guv! Sooner or later people's eyes open, and I have tried to make it my job to help get that done locally. A few sleepy heads never quite get it, and that must be accepted. To those who say we should not saddle our children with debt, I can only say that we'll be leaving them bigger inheritances if we pay less tax. Meanwhile they'll have the schools they need while they're young. On the state income tax front, totally neglected by our local state legislators, one might observe an obscure rule in the Georgia personal income tax form which requires taxpayers to use the standard deduction in their Georgia tax return if they have used it in their federal tax return. The trouble is, the 2001 standard deduction (for a married couple) is $7,600 in the federal tax return, but it's only $3,000 in the state return. By clinging to its archaic low-level standard deduction, the state seeks to tax $4,600 more than the federal government for people who use the standard deduction. At a 6 percent rate, that will cost $276. For people with itemized deductions exceeding $7,600, there's no problem, as itemized deductions will be used on both the federal and the state returns. But imagine your itemized deductions come to $7,200. If you follow the obvious rules as you find them, you'll deduct $7,600 on your federal return and $3,000 on your state return. If you decide (as you should) to outsmart the state, you will itemize $7,200 on your federal tax return and pay the extra federal tax (possibly $60 here, at 15 percent), and then you'll itemize the same $7,200 on your state return and save state income tax on $4,200 (possibly $252, at 6 percent). You might be unhappy that the state of Georgia forced you to pay an extra $60 in federal tax, but you'd still have a net gain of $192. It's obvious to me that the state should take a serious look at its standard deduction rule. In the west part of Fayette County we have a state senator who I understand is an accountant, and before him we had a life insurance agent with the skills to handle the needs of high-net-worth individuals, yet not a peep was ever heard from either about fixing any part of our state income tax law to make it fairer. For the state to make some citizens pay more federal tax than they should is, in my opinion, fairly stupid, but it strikes me as dishonest for the state to make us, its citizens, pay sales tax on the rebate part of our purchases, especially on big items like cars. Just go to a new car dealer, and see what I mean. The manufacturer gives you a so-called rebate (some as high as $2,500, with $2,002 currently on many vehicles), which is deducted immediately from the price. Even though you're paying, say, $18,000 for the car, the dealer charges sales tax on $20,000 and insists he has to under state rules. For a resident of Fayette County, that's like throwing $100 away, though a Coweta or Fulton County resident is throwing $140 away. Since a rebate, especially an instant rebate applied at the time of purchase, reduces the sales price, it's extortion for the state to impose sales tax on the phantom part of the price. It happens every day with grocery coupons, and all these pennies add up. If a rebate is supposed to be mailed by the manufacturer later on, the state could possibly argue it's not sure you'll ever get it, but there's no argument about an in-store rebate. Our state legislators haven't been fighting for us on that. I have some qualms, too, about the imposition of sales tax on shipping charges, since shipping is a service, and on some rental fees where the landlord has already paid a sales tax when buying whatever it is that's being rented. When SPLOST was being proposed to our citizens, I observed that the state keeps 1 percent of what it collects in local sales tax as a service fee. What is interesting here is that whenever an extra 1 percent is added to an existing local sales tax, the state's service fee doubles or even triples in amount even though the state's work is absolutely the same. That's all at the expense of the local people, who receive that much less from the state. Even though rough justice characterizes our tax collection system, there comes a point where the roughness mutates into outright unfairness, or even stupidity (as when one must pay more federal tax than the feds would settle for, just to avoid paying too much state income tax). Let's pass on the word to those who would represent us in the Georgia General Assembly, especially those who like to harrumph about taxes. And if you can save yourself a little state income tax from what you learned here today, congratulations! Those who think their "fair share" is higher than their lowest computed tax should know that the feds, the state, and the local school board will accept voluntary contributions; the little extra so good-naturedly given to the government will even be deductible as an itemized deduction. As Yakov Smirnoff would say, what a country! Claude Y. Paquin Fayetteville cypaquin@msn.com
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