Members' Corner

Speaker Richardson has whipped up a lot of excitement with his talk of eliminating property taxes. Careful examination of his plan reveals that it goes far beyond that and demands careful scrutiny.

The plan, dubbed the "Get Rid of Every value Added Tax" (GREAT) began as a bill in the final days of the last session of the state legislature but was not brought to the floor for a vote. Although no new drafts have been released, the plan apparently has been changed as evidenced by statements made by the speaker and other members of the house leadership.
The final bill will be crafted by the leadership, house members, their staff and thousands of lobbyists when the house reconvenes in January.

The goal of the plan is to eliminate all property tax and replace the revenue with a statewide sales tax distributed to local governments through a formula determined by the state legislature. The plan also will create a new tax on most services including health care, legal, accounting, landscaping, engineering, cosmetology, construction, vehicle and equipment repair, transportation, advertising, pest control, child day care, and real estate commissions to name a few.

The speaker's campaign to garner support for his plan is brilliant but deceptive. Local officials are being demonized for their opposition to the plan for "simply playing word games" regarding local control. In a recent op-ed piece the speaker wrote, "I believe local control is letting citizens decide, through a vote, when the system needs to change and letting them decide each and every day at the cash register how much they pay in taxes."

While this statement certainly is appealing, it only tells part of the story. It ignores the fact that under the speaker's plan the tax rate will be set under the Gold Dome and funds collected from it will be sent to the Gold Dome to be parceled out to local governments as state legislators see fit.

Another troubling aspect of the plan is the fact that it will cause redistribution of wealth throughout the state. It sets an arbitrary share of taxes collected statewide for local governments and allows adjustments for inflation and population growth. Over the past few years Cobb Countians have made significant investments to make Cobb County an attractive place to visit as well as live. Two significant examples are The Arts Center and The Strand. Should these investments pay off by attracting consumers from neighboring counties, it should be Cobb County that benefits, not the state legislature.

According to a letter to county commissioners from Jerry Griffin, Executive Director of the Association of County Commissioners of Georgia who met with Speaker Richardson to discuss his plan, "the Speaker did acknowledge that this is an income redistribution system with the goal to bring those below the median service level up while holding everyone else where they are at."

The Speaker has engaged noted economist Arthur Laffer, champion of supply side economics during the Reagan administration and after whom the "Laffer Curve" is named, to help create his plan. At the heart of supply side economics is the assumption that the amount of money collected in taxes increases when tax rates are cut.

According to Griffin's letter, the leadership fully expects tax receipts to rise after implementation of Richardson’s plan, creating a windfall for the Gold Dome.

How would a windfall be handled? Who can tell given the Gold Dome's budget process where numbers are crunched by a handful of members in committee then voted on by all - few of which will have read the entire bill. By contrast, local governmental bodies’ budget process involves real numbers from department heads, public hearings and is much more open to the public.

At an emotional level, replacing property taxes with sales taxes seems to be a good thing. After all, why should home ownership come with the additional burden of paying for things used by renters for free? And why should local governments be able to raise taxes simply by changing the millage rate or re-assessing the value of your home?

Has there been abuse? It's an easy claim to make given that from 1999 to 2005 personal income increased 147 percent, while property tax revenues increased 177 percent.

There is much public support for fundamental changes in tax policy. The speaker's plan hijacks this support and translates it into support for a shift in power to Atlanta.

Regarding the GREAT plan, let the buyer beware.