Georgia Speaker Is Considering State Tax Overhaul

Published May 1, 2007

Georgia House Speaker Glenn Richardson (R-Hiram) has hired economist Arthur Laffer, known as the father of supply-side economics, to develop tax solutions for the state.

Laffer has proposed eliminating all taxes in Georgia except for “sin taxes,” a 5.75 percent flat income tax, and a 5.75 percent consumption tax on all goods and services.

‘Every Option’ Considered

Richardson describes Georgia’s tax system as “antiquated and burdensome.” He promised to “examine every option, every variable, and every proposal” to come up with sound tax reform legislation by early next year.

Richardson’s effort comes as the state legislature, inundated by tax reform proposals this year, tries to sift through the good, the bad, and the ugly. Richardson is using funds from his political action committee to pay Laffer.

Richardson embraces Laffer’s ideas as “truly cutting-edge, twenty-first century models,” adding, “It’s time to move this state forward with comprehensive tax reform.”

Some Taxes Already Targeted

Tax proposals currently under consideration in the Georgia Legislature include elimination of the income tax, the corporate income tax, the car tag tax, and taxes on seniors.

Affecting the move toward taxpayer protection, however, are proposed increases, including a one-cent transportation-related statewide sales tax and a regional special local option sales tax that would allow counties to join forces on regional transportation projects.

Some business groups and local government officials are reluctant to speak out but are watching closely as Richardson’s reform proposals take shape. Fiercely protective of local control, Georgia communities may resist ceding revenue control to the state.

Initial Reaction Looks Promising

Joe Fleming, senior vice president of government affairs at the Georgia Chamber of Commerce, said the chamber awaits more details but “appreciates the leadership interest in creating the fairest possible, pro-business tax climate in the country.”

Jerry Griffin, executive director of the Association County Commissioners of Georgia, said the organization “fully supports a review of Georgia’s entire tax structure.”

“We have had a fairly well balanced system, but in recent years we have seen group after group come in with additional exemptions from the current taxes,” Griffin says. “Each exemption serves to shift the burden to those that don’t have an exemption, and that can create an imbalance that can impact the state’s economy.”

Dramatic change is sure to worry the special interests who benefit from more than 100 sales tax exemptions on the books in Georgia.

Georgia has six income tax brackets, with the highest reached quickly. Taxpayers must be persuaded that a new policy is flatter, fairer, and simpler, Richardson says.

“My goal is to ensure that our hard-working families are able to keep more of the money they earn and give less of it to the government,” Richardson said. “I intend to lead on this issue, and I want everybody in the country to notice what we’re doing in Georgia.”

Kelly McCutchen ([email protected]) is executive vice president, and Benita M. Dodd ([email protected]) is vice president, of the Georgia Public Policy Foundation.

For more information …

“Georgia’s Tax System: A Factual Foundation for Fundamental Tax Reform,” Tax Foundation,