BNJacksonGA

The grand plan to restructure Georgia’s tax code and reform the system appears ready to go up in smoke, as it should. It seems everyone finds something in this bill to hate. Tax increases on cigarettes, gasoline, cable; loss of tax exemption for Boy Scouts, Girl Scouts, church youth groups; new sales tax on haircuts, brake jobs, veterinary services – the more you read, the worse it gets. But to those who are familiar with the Fair Tax concept, having this proposal likened to the Fair Tax is downright insulting.

Some GA citizens, including some GA legislators, are under the impression that the tax reform legislation bills HB 385-387 is like the federal Fair Tax. The 127 page bill, created from the Special Council on Tax Reform and Fairness For Georgians recommendations, is definitely not the Fair Tax. In a multitude of ways this bill differs from the Fair Tax, but here are three big differences.

The Fair Tax is only on new goods and services. The GA bills specifically add sales tax to used cars, boats, and planes sold by individuals along with a bevy of selected services. It doesn’t repeal sales tax currently required from dealers for resales.

The Fair Tax would eliminate the need for the IRS. These bills would have no effect on the federal tax system nor repeal state income tax, so all the tax prep headaches and expenses would still be with us, along with the IRS and the GA Dept of Revenue.

The Fair Tax replaces income tax and many other taxes with a sales tax. The Council stated numerous times that they did not expect to replace GA income tax, which provides about 1/3 of state revenue. They did recommend ratcheting down the tax rate, from 6% to 5% for 2011, and maybe down to 4% later “if the state could afford it.” The aspect they aren’t discussing much is their simplification of the tax code – translation: no personal exemptions, retirement income exemptions, or standard/itemized deductions. Put simply, people could easily end up paying more income tax because so much more of their income is taxable.

Since the examples given by the Council’s report only showed favorable income tax outcomes, let’s see two outcomes that may be more typical for metro Atlantans. A 65 year old retired couple making $50,000 under the current system would pay $55 state income tax. Under this bill, they’d pay $614.How about a couple making $75,000 with 2 kids and a mortgage? Currently their GA tax would be $2473 - under the new guidelines, $3550.

Bottom line: This is not the Fair Tax. There’s not even a close resemblance. With all the new taxes and tax increases , this looks more like a huge tax increase posing as tax reform.