Thursday, August 9, 2007

4 + 4 = 0

Georgia Republicans are fond of referring to their proposal to impose new taxes and engineer the greatest centralization of government in the history of the state as "4 Plus 4 = 0." (4 % sales tax plus 4% income tax = 0 property tax) They're right about one thing-this plan just doesn't add up, and they're drawing unexpected critics, including respected member of the business community.

Neely Young, writing for Georgia Trend shows very little love for Glenn Richardson's great big fat tax proposal. It seems that the Speaker's proposal to tax your child's haircut, daycare and dentist appointment would also not be very business-friendly. Young points out that 80% of Georgia business are in the service sector, and those services would be subject to a brand spankin' new 4% value-added tax. The Speaker opines that this is simply a pass through-that actually consumers of the services, not businesses, would pay the tax. Young, however, points out that the tax would show up as an expense and impact the a company's bottom line. (The Speaker also erroneously assumes that all clients of attorneys and patients of healthcare professionals show up prepared to pay.)

Young also points out what may be Richardson's real agenda here: if Richardson gets his way, the Speaker of the House will become the most powerful position in state government. Here's a portion of what Young has to say:
Soon, Georgia citizens will have two constitutional amendments proposing sales tax increases. One amendment will be for an addition to the motor fuel tax, and another for the Speaker’s 4 PLUS 4 = 0 proposal. The 4 PLUS 4 = 0 is not a tax reduction, but a tax shift, from property owners to business and to people who purchase services. Business will collect the tax; but, as noted before, will have to place the tax as an expense on each individual business’s general ledger, potentially lowering operating profits. But the proposed tax would also represent a shift in power from city and county governments and school boards to the State of Georgia. According to Georgia’s constitution, all taxing proposals must originate in the House of Representatives. Under this plan, the Speaker of the House of Representatives will gain more power than ever. With the state collecting all the tax revenue, this would raise the question of whether we need local mayors and council members, county CEOs or commissioners or school board members. For that matter, with so much power residing in the House of Representatives, would we even need a Governor or Lieutenant Governor, except as ceremonial positions? Under the 4 PLUS 4 = 0 plan, Richardson would make the Speaker’s office the most powerful position in Georgia.
Let’s assume that Glenn Richardson is skillful enough to implement his tax plan in such a way that he would make all city and county employees, not to mention teachers and ordinary citizens, very happy. But would the next Speaker, whoever that might be, be able to pull that off? The plan would concentrate a great deal of power in one position. Remember, the Speaker’s position is determined by the members of the House of Representatives, not by the general public. These House members are beholden to him for their positions. We could easily get stuck with a bad leader, and Georgia citizens would have no way to get that leader out of office.
This is a major danger in this proposed constitutional amendment and one that should be considered in the overall proposals.

1 comment:

Tina said...

Retirees like me would just stop buying stuff except for necessities. I make most of my "fun" purchases (CDs, books etc.) online anyhow. Also the Republicans are thinking about home-owners, but not about those of us who live in apartments or who rent houses. it wouldn't help us a bit.
Also, people who live within a few miles of Alabama, Florida, TN, or SC, would probably increase the amount spent out-of-state. Sort of like going to Canada for prescriptions.
And, hey...there's another thing to consider. Penny-wise tourists would probably take a dim view of paying extra taxes on Georga purchases.
If I am understanding this proposal right, it's a DUMB DUMB DUMB (not to speak of mean-spirited) idea.