Bookman: Plan to end Georgia’s income tax is an election-year illusion

Lt. Gov. Burt Jones is running for a promotion to governor, and he’s planning to use this session of the state Legislature as a stage for his campaign. There’s nothing wrong with that, of course. That’s how the political system works. However, the proposal that Jones intends to make the centerpiece of his campaign – […]

Lt. Gov. Burt Jones, a Republican, launched his campaign for governor last year with a pledge to end the state's income tax. A special Senate committee he created has laid out a plan to do it by 2032. Ross Williams/Georgia Recorder

Lt. Gov. Burt Jones is running for a promotion to governor, and he’s planning to use this session of the state Legislature as a stage for his campaign.

There’s nothing wrong with that, of course. That’s how the political system works. However, the proposal that Jones intends to make the centerpiece of his campaign – a plan claiming to eliminate Georgia’s state income tax – is irresponsible, unworkable and extremely misleading.

For proof, let’s turn to a report issued a few weeks ago by a Senate study committee appointed by Jones, explaining how the new tax plan would allegedly work. On its first page, the report makes a series of fantastic claims:

• Over a few years’ time, the plan will totally eliminate the state income tax, which currently raises about $20 billion, or more than half of the state’s revenue.
• The plan will “benefit every working Georgian equally.”
• The plan “does not increase the sales tax nor create a state property tax, nor does it cut government services to Georgians.”

That raises a lot of questions, but the most basic is this:

Do you believe it is mathematically plausible to eliminate more than half of the state’s revenue, without cutting services and without raising other taxes, while benefitting all working Georgians equally? If your answer is yes, Jones has found the sucker that he’s been seeking.

If you cut more than half of your current revenue, but keep spending at current levels, basic arithmetic says you will have to look for new revenue from some other source. As a practical matter, that would inevitably mean raising the state sales tax. Other options might help around the edges, raising a few million here or there, but a significant sales tax increase would be absolutely necessary to close that revenue gap.

We also know something else with absolute certainty: Shifting the tax burden from the income tax to the sales tax would increase taxes paid by lower- and middle-income taxpayers while substantially cutting taxes for those with high incomes. That is not a rebuttable statement; it is basic math and well-understood tax policy. 

So while the Senate report styles itself as a tax-cut plan intended to help “financially struggling” Georgians, over time it does the opposite. It is a tax-shift plan, lowering the tax burden on financially thriving Georgians and increasing the tax burden on lower- and middle-income Georgians.

The Senate proposal attempts to disguise that impact in several clever ways. Initially, it would abolish the income tax only on the first $50,000 in income, or $100,000 for a couple filing jointly, while tapping the state’s current budget surplus to make up the lost revenue. 

That is intended to be merely temporary, however. The surplus will disappear fairly quickly, and in later years the income limits would disappear as well. At that point, the sales tax will have to increase and the true costs of the tax-shift proposal will begin to hit home for the vast majority of Georgians.

Think of it as a car salesman’s pitch:

“We’ll put you in this fine, beautiful car right here,” the salesman says, running his hand down the gleaming, candy-apple red hood. “You can drive it home today.”

“Well, it looks great,” you respond.  “But what are my payments going to be?”

“Not to worry. We’ll let you know about your payments two or three years from now,” the salesman says. “In the meantime, sign your name right here and I’lI grab those keys for you!”