A little time to ponder tax reform in Georgia as legislature takes a break

I’ve had little good to say about the current Georgia legislative session, so it’s especially interesting to note that tension between Republicans generally, tension between social conservatives and economic conservatives, and tension between the Lt. Gov. and the Senate leadership specifically seem to be making a generally unproductive legislative session even more so. (Which might not be a bad thing.) See Jim Galloway’s posts at the AJC like the one here and posts like this on the right-leaning website Peach Pundit here.

The messy politics are making it even harder to pay attention to the very real issue of changes to the state tax code. Here‘s a more or less current draft of the bill under consideration. Essentially, we’re looking at a bill that would shift the tax burden away from income taxes, while at the same time modestly adding to the reach of the state sales tax and eliminating some tax exemptions.

So what would happen if the state income tax were reduced from 6% to 4.5% (my guess is that a final bill will reduce it less dramatically). Analyses that I have looked at so far differ somewhat. By adding sales tax to motor vehicle repairs and some other services, the overhaul might mean higher taxes at the end of the day for some members of Georgia’s middle class, broadly defined. Some of the most controversial changes from earlier proposals — like a restoration of state sales tax on groceries and an increase in cigarette taxes — seem to be off the table, as Republicans struggle to garner enough support to satisfy a majority in both the House and Senate.

Kyle Wingfield at the AJC fears that the attempts to reach a broad consensus among Republicans will water the bill down to make it all but pointless, while the apparently powerful lobby of the Georgia Baptist Convention has drawn a line in the sand over exemptions for charitable contributions. Charlie Harper at Peach Pundit has more from a few days ago: Ongoing Changes To Tax Bill Diminish Scope But Increase Support.

I don’t know how all this will play out, but it looks like the ultimate changes to the tax code will be far more modest than the significant shift to consumption taxes that was originally discussed. The fact that Georgia — whose state government is firmly controlled by Republicans at all key levels — seems poised to make such small changes might be an indication of just how politically difficult (or even impossible) broader tax reform/overhaul/change will be, especially if it involves a broader reach for sales taxes or a reduction in the number of exemptions.