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Tax reform — Pass or fail?Tax reform — Most every candidate running for state office has talked about some form of it. Finally after years of talking about it, it appears that the Georgia General Assembly will deal with tax reform next year. I have long supported tax reform. Since my first session, I have introduced and supported bills to reform our state’s tax structure. Now, the Speaker of the House has proposed his reform, the GREAT plan. On the surface, it sounds really good. It would eliminate every ad valorem tax and replace it with a combination of a consumption tax on all goods and services and some restructuring of income taxes. Since I hate property taxes and feel they are the most unfair tax of all, I took a serious look at the Speaker’s plan. Since I have worked on tax reform bills, I had already established some basic principles to govern the process. Remember the saying, “If you don’t know where you are going, any road will get you there”? Well, by establishing basic principles you will know where you are going and will know when you get there. Basic principles also help to keep personalities and politics out of the equation. For me, basic principles of tax reform are: 1. It should be fair; 2. It should be simple; 3. It should be easy to comply with; 4. It should be transparent; and 5. It should comply with other basic principles. Let’s consider the Speaker’s plan according to my reform principles. Is it fair? Well, it would shift tax collections based upon spending, rather than property. That sounds good. But, looking closer, the plan would eliminate current exemptions on food and is unclear on other items like housing and medical. So, as far as being fair, it doesn’t yet pass. Is it simple? It is unclear on exactly what would be taxed. Also, Atlanta would be collecting all taxes and then somehow allocating back to local governments based upon some formula. For me, it doesn’t pass the simplicity test. Is it easy to comply with? Currently you pay your tax bill either through your escrow account or by writing a check at this time of year. The plan would shift to paying a tax when you buy a good or service. I don’t see any violation of this principle, but I don’t really see much improvement either. Is it transparent? The GREAT plan would eliminate the property tax assessment fog that currently exists. Few people understand the process. It is easier to see a set rate per dollar than what businesses have to add to their purchase prices to cover their property taxes. However, the details of the plan have not been totally worked out and word is the plan will include some sort of business to business transactional tax. If so, that would cause it to fail this principle. Finally, does it comply with other basic principles? Frankly, to me it fails this principle the most. The plan would have all taxes collected in Atlanta and then be allocated back to local governments based upon some formula. Most politicians ran on platforms against unfunded mandates and supporting local control. This plan would greatly weaken local control. If your school system wanted to hire more teachers, or if your county wanted to hire more sheriff deputies, or if your fire department wanted a new station or new firefighters, they would have to go to the General Assembly and beg for them. As it is now, they have to ask their constituents for them. If constituents’ expectations aren’t met, they can vote their local elected officials out of office. With the Speaker’s plan, local residents will not be able to have the same level of influence. They would trade voting for one out of five members of the county commission or three out of seven members of the school board for voting for two out of 236 members of the General Assembly. Their influence over local matters would be greatly diminished. And to me, I want to increase the influence of citizens over government, not weaken it. I am glad to see that tax reform is finally a serious topic under the gold dome. I appreciate the Speaker’s effort at a bold tax reform plan. The beginning of session is two months away. There is still time to create a reform plan that meets sound principles for reform. I look forward to working with him and others to develop that tax reform plan. [Senator Mitch Seabaugh, R-District 28, Sharpsburg, is the Senate Majority Whip.] login to post comments | Senator Mitch Seabaugh's blog |