Calls For Tax Hikes Resisted

By Walter C. Jones - Morris News Service
The Athens Banner-Herald
February 23, 2010

ATLANTA - Georgia legislators aren't in session this week because they're busy taking a closer look at ways to cut the state's budget for the fiscal year starting July 1.

When last month's report of tax collections showed the slide hadn't bottomed out as projected, the leaders called an unusual two-week recess so the budget-writing committees of the House and Senate could trim more than Gov. Sonny Perdue had recommended cutting.

One committee that doesn't have any meetings scheduled during the recess is the House Ways & Means Committee, where any bill to raise taxes must originate.

Republican leaders have said repeatedly that they oppose raising taxes, especially in a weak economy, because they don't want to create any obstacles for employers who might create jobs.

A couple of maverick committee chairmen have authored modest proposals that have failed to move out of tax-writing committees.

Rep. Ron Stephens, R-Savannah, sponsors a bill to hike the tax on cigarettes by $1 per pack, and Sen. Greg Goggans, R-Douglas, sponsors legislation to charge the state's sales tax on lottery tickets.

Stephens, a pharmacist who chairs the House Economic Development Committee, argues a tax increase would discourage smoking, and Goggans, chairman of the Senate Community Health Subcommittee, argues taxing the tickets will reduce the need for spending cuts to Medicaid.

Senior Democrats haven't trumpeted the cause of tax increases, either. Instead, they have called for cracking down on sales-tax cheats.

On Thursday, though, a group of eight rank-and-file Democrats from the House and Senate held a news conference to make public their support for a range of tax increases.

In addition to the tax-cheats bills and those by Stephens and Goggans, they proposed eliminating tax credits designed to spur job creation and temporarily boosting income taxes for people earning more than $400,000.

"The legislative proposals to cut taxes keep pouring in, with no reliable data to show that these cuts create jobs or help working families," said Rep. Virgil Fludd, D-Tyrone. "While we are furloughing teachers and state workers, and cutting education, health, social services and public safety programs, it is only fair to make a comparable reduction to tax credits and exemptions."

Alan Essig, executive director of the independent think tank the Georgia Budget and Policy Institute, has been making the case for years that Georgia's taxes need to rise.

If GOP leaders are afraid employers will flee to states with lower taxes, they'll have a hard time finding one, according to Essig.

Besides, he points to federal figures that show states that increased taxes significantly during the recession of 2001 still enjoyed healthy growth between 2004-07.

Median wages matched the national average; employment and personal income each grew one-tenth of a percent less than the national average.

On the other hand, he says, some states that cut taxes then wound up growing slower than the national average.

The reason, he said, is that wealthy people usually pay the added tax with money they would have saved or spent out of state.

But budget cuts that result in layoffs for government workers means their entire personal income isn't spent in the state's economy.

Picking between layoffs and tax increases isn't easy, Essig says.

"It's not like one is good for the economy and the other isn't," he said. "It's a bad choice. That's the problem with recessions - you have to make bad choices."

The bills to raise taxes remain in committees, where most have had no hearing or vote.

At the same time, another one to cut taxes is headed toward a vote in the House.

Last week, the House Committee on Small Business Development and Job Creation unanimously passed House Bill 1023, the Jobs, Opportunity and Business Success Act of 2010, sponsored by Rep. Tom Graves, R-Ranger.

Graves' combination of tax credits, tax cuts and other incentives aims to spur companies into expanding their payrolls.

"There is only one way to promote sustainable job creation, and that's through the expansion of the private sector," he said.

Essig can sense that he hasn't convinced the leadership.

"You have to make the least-bad choice," he said.

Originally published in the Athens Banner-Herald on Tuesday, February 23, 2010

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