Tax reform bill appears dead for 2011 in Georgia legislature

So should I take the time to write a post about something that most of my friends have paid no attention to all and that — as it turns out — isn’t going to happen?

What the heck, why not?

One of the most ambitious plans in the Georgia legislature this year was to reform (or maybe just “change”) the state tax code, with a heavy lean more toward consumption taxes and away from income taxes. The latest incarnation under consideration would have reduced the personal income tax rate from 6% to 4.6%, but it would have also done a number of things of varying degrees of controversy. There seemed little opposition to a tax exemption on energy used for manufacturing, but a lot of middle-class and lower-class Georgians would no doubt have felt some sting from extensions of sales taxes to cellular and digital services, automobile repair labor costs, and casual sale of cars between individuals (all were still in the bill that was being considered today). Charitable donations would also no longer have been itemized deductions, which had created strong opposition especially from some Christian groups, a powerful force in state politics.

Late afternoon and early evening reports — like this one in the AJC — make it seem that there will be no major tax bill in Georgia this year: House Speaker David Ralston Ralston, “R-Blue Ridge, said he and Republican leaders in the House were not confident in the accuracy of projections provided by the Georgia State University Fiscal Research Center and he did not want to force a vote.”

Well, I’m not confident in those projections either. They assumed a cell phone bill of $70 (my all-inclusive plan is a little higher), but many families have multiple phones with bills far higher; that monthly cost would have been subject to a 7% tax. The bill assumed $125 on labor each year for auto maintenance — literally just a few hours. I’ve already spent that so far in 2011.

The failure to pass a bill is being spun as a sort of timeout, giving legislators a chance to make the bill even better before a session later this year or in 2012. But I suspect some behind-the-scene pressures played a role, and I see the whole process, which began about a year ago when former Governor Perdue established a special commission to reform the tax code dramatically, as something of a failure for economic conservatives who’d like to see lower rates, fewer deductions, and an increasing reliance on consumption taxes.