Republican ‘tax reform’ in Georgia will mean big tax hike for many

http://blogs.ajc.com/jay-bookman-blog/2013/03/15/ga-tax-reform-will-mean-big-tax-hike-for-many/

by Jay Bookman, blogs.ajc.com
March 15th 2013

If you want to pay higher taxes, (Republican) state Sen. David Shafer, the Senate president pro tem from Gwinnett County, has just the plan for you. He has proposed two amendments to the state constitution that, if approved by voters, would lead to significantly higher taxes on the vast majority of Georgia households, while sharply reducing taxes on the wealthiest.

That ought to be controversial under any circumstances. As it is, lower- and middle-income Georgia households already pay a significantly higher percentage of their income in state and local taxes than do the wealthy. The Shafer amendments would make that disparity considerably worse.

First, let’s take a look at the current disparity. According to a study of state tax structures by the Institute on Taxation and Economic Policy, middle-class Georgians — those with incomes of $15,000 to $80,000 — today pay roughly 10 percent of their income in state and local taxes. In contrast, the top 1 percent — with an average income of $983,000 — pay less than 5 percent of their income. That’s barely half the rate paid by lower-income Georgians.

The reason for that disparity is clear. Unlike the federal government, Georgia raises roughly a third of its revenue from the sales tax, and the sales tax always hits the poor and middle class much harder than it does the wealthy.

Again, the ITEP report documents the disparity. The richest 1 percent of Georgia households today pay just 0.8 percent of their income through the state sales tax and excise taxes. In contrast, the sales tax takes 4 to 6 percent of the income of middle-class households, because unlike the wealthy they tend to spend most of their income, and they tend to spend it on taxable items rather than services.

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