A relatively quick post this morning to point out the 1/22 release of “ALMOST THERE… Tax Council’s Recommendations Improve Finances, but Shift Taxes onto Vulnerable and Working Georgians” by the Georgia Budget and Policy Institute.
The GBPI is one of the best sources (probably the best) in the state for solid numbers and clear analysis regarding state budget issues.
I don’t know how all this will play out politically, but the recommendations from the Special Council on Tax Reform and Fairness, if adopted as is, will put more economic pressure on lower and middle class folks — the very consumers that we most need to fuel an economic recovery. I wrote about this issue recently in a little-read post Georgia’s budget under Nathan Deal.
This may not be very exciting stuff, but it sure is important.
With higher taxes on groceries and services, and with lower income tax rates like those recommended, the tax burden would subtly shift from the wealthy to the not-so-wealthy.
Among the highlights of the GBPI analysis:
- those making anything less than $75,000 a year would see on average about a 1% increase in their tax burden. That’s an additional $550 for someone making between $50,000 and $75,000.
- actual reductions in taxes only kick in for those making over $157,000
- a Georgian making $400,000 a year could expect a tax reduction of $8,000
I understand the arguments regarding the inherent fairness of consumption taxes and I understand the arguments that it is simply inequitable for high earners to pay a higher percentage of their income on taxes.
But higher taxes on most of the state’s residents, if enacted right now, will make the recovery more difficult — and might help push us back into recession.
The GBPI recommends a number of tweaks to the system that would flip the data so that wealthy people would pay marginally more while the bulk of the state pays less. I don’t think those recommendations have a prayer of passing through our conservative state government, but perhaps political pressures will prevent the tax changes from being passed as they were recommended.