ATLANTA — As House and Senate leaders jostle over the best tax cut policy — reducing either property or income taxes — most North Georgia legislators just mainly want a cut. They’ll leave it up to the higher-ups to duke it out.
The House has passed a constitutional amendment proposal to eliminate the property tax on cars over the next two years, put caps on property assessment values and do away with the state’s quarter-mill tax on property. Voters would decide on the Nov. 4 ballot.
The Senate responded with its own tax reform plan, putting limits on state government spending and cutting the state income tax by 10 percent over the next five years.
Both measures are expected to be debated on the Senate floor today.
“The neat thing is we’re arguing what to cut and when,” said Rep. Martin Scott, R-Rossville, who has made his own proposals to trim the state income tax.
Rep. Tom Graves, R-Ranger, likes the Senate measure to limit government spending so it does not exceed population growth plus the government inflation index. He introduced a similar bill earlier in the session. He wants to see spending caps, no matter whether property or state income taxes are cut.
“It’s a legislative process,” Rep. Graves said. “We’re a bicameral government. Hopefully it will result in what’s in the best interest for all Georgians. My hope is we don’t get into argument of who gets ownership.”
Sen. Chip Rogers, R-Woodstock, said Thursday he believes both sides are “working toward a meaningful tax cut.”
“I like their plan, but I love our plan,” he said.
He said the state income tax would small business, as well as individuals.
“It could be an employer who’s now able to give you more money,” Sen. Rogers said.
Sen. Jeff Mullis, R-Chickamauga, said he wants to see a tax cut and “appreciates the different opinions.”
The Senate Transportation Committee chairman said other legislation rides on the ability for the chambers to compromise on a tax cut, especially his proposal for creating a special purpose local option sales tax to fund regional transportation projects.
“We need to pass a tax cut before there’s a vote on the TSPLOST referendum,” Sen. Mullis said.
Senate President Pro Tem Eric Johnson agreed.
“Should the (tax cut) train come off the tracks, we don’t want to put a tax increase on the ballot,” he said about the optional sales tax.
The House and Senate do agree on Gov. Sonny Perdue’s proposal to eliminate the state portion of property tax — an estimated savings of $30 per homeowner, capping property assessment values and some form of “significant” tax cut, but whether it will be vehicle or state income tax is the big question, Sen. Johnson said.
House concerns
North Georgia members still believe the taking away the tag tax would be the fairest.
Not paying vehicle registration would be the most helpful option to older Georgians,
“A lot of elderly people don’t file income tax, but they do have a vehicle to go to the grocery store,” said Rep. Barbara Massey Reece, D-Menlo.
She said she supports the assessment caps and quarter-mill reduction, but suggests more study on major tax reform measures.
Rep. Tom Dickson, R-Cohutta, said eliminating the car tag tax would be just the right amount for a tax cut in a slowing economy — about $672 million a year when fully implemented in fiscal year 2011.
“It’s a more immediate impact,” he said. “It starts a year later, but when it goes in, it’s the largest impact. ... (The income tax cut) is a small cut to begin with but ultimately becomes too large of a cut.”
Replacing revenue
Gov. Sonny Perdue has criticized both tax cut proposals as irresponsible and political in a time of economic slow-down and declining revenues.
The Georgia Budget & and Policy Institute, a nonpartisan organization that researches the fiscal and economic health of the state, has come out against both tax cut options. It notes both education and health care suffer first when there’s a hole in the budget.
“The combination of a $1.2 billion tax cut and limiting the growth of state revenues would in practical terms de-fund state government,” Alan Essig, executive director, said in a statement for the institute. “This irresponsible game of whose tax cut is bigger must stop. The General Assembly needs to take the economic and budget realities of the state into consideration.”
Republican legislators stand by a philosophy that economic downturns are the best time to cut taxes because the economy is stimulated when people, not government, decide how to spend their money.
“They’ll spend it or save it, and it trickles down into the economy,” Rep. Scott said.
Mr. Essig argues that tax cuts only stimulate governments that can run deficits, not for states like Georgia that are required to balance the budget. Otherwise, there’s a hole left in the budget and tough choices to be made.
Rep. Scott said some legislators would be willing to make those choices.
“Some believe belt-tightening for government would be a good thing,” he said.
