| Fiscal and Tax Policy
Several Options Would Lessen the Tax Shift Proposed in the Tax Council's Recommendations
The Special Council on Tax Reform and Fairness for Georgians released their recommendations on January 7. The recommendations include some much needed changes that will help our tax system better reflect today's economy, such as the move to expand the sales tax to services. Although many of the recommendations mirror GBPI's own recommendations for tax reform, there are also some concerning elements, such as the imposition of state sales tax on groceries and the resulting shift of taxes onto those least able to afford it.
GBPI offers adjustments that would lessen that tax shift:
- Maintain the grocery exemption and lower the income tax rate to 4.5 percent rather than the 4 percent recommended by the Council;
- Lower the state sales tax rate to 3.5 percent and lower the income tax rate to 4.5 percent rather than 4 percent;
- Re-craft the proposed personal income tax credit into a robust, refundable low income tax credit and targeted standard deduction.
Download GBPI's analysis here, and look for GBPI's editorial in Sunday's Atlanta Journal-Constitution.
TABOR Bill Passes Senate Finance Committee
The Senate Finance passed Senate Resolution 20 on Wednesday. The constitutional amendment would restrict state spending to a formula of population plus government inflation, similar to Colorado's TABOR.
In 2005, Colorado voters suspended the TABOR formula for five years to stop the many harmful budget cuts that had occurred under TABOR. Since Colorado adopted TABOR in 1992, more than 20 state legislatures have rejected TABOR, and it has been voted down in every state in which it reached the ballot, according to the Center on Budget and Policy Priorities. Business leaders, elected officials from both parties, and higher education officials, among others recognize that TABOR has limited Colorado's ability to fund critical services. Click here to watch a video on this issue. Senate Resolution 20 moves to the Senate Rules Committee.
First Tax Expenditure Report Released
The budget included a new feature this year that brings more transparency to spending made through the tax code. Georgia has more than 100 tax exemptions and credits; however, prior to this budget, the state did not have an annual accounting of the cost of these programs. Senate Bill 206 passed last year and requires that the governor's budget sheds light on tax code spending through an annual tax expenditure report. Legislators will have an opportunity to see where the tax code spending happens and debate whether those dollars would be better spent in direct spending on services or in lower tax rates for the rest of taxpayers. State leaders will now need to explore what additional reporting and evaluation should occur so that tax breaks aren't just transparent but also accountable to Georgians. | 
