When Glenn Richardson took the stage at the state Republican convention in May to unveil his plan to eliminate property taxes, it had the ring of a "lottery speech" -- the kind of grand, populist proposal that could be used to propel a guy into the governor's office. It certainly worked for Zell.
The state House speaker from Hiram didn't share many details at the time, but offered over-the-top promises for how his tax plan would shake things up in Georgia. "I'm going to be about changing state government and I'm going to be changing it more than it's ever been done," he boasted.
The response among the GOP faithful gathered in a nondescript hall in the Gwinnett Civic Center was polite applause. But to some, Richardson's ambitious ideas are at least a refreshing change from the lame-duck listlessness of somnambulant Gov. Sonny Perdue.
And, in recent weeks, the speaker has been nothing if not busy.
He's been on a tear across the state, stumping for his not-so-humbly acronymed GREAT (Georgia Repeal Every Ad valorem Tax) Plan. The scheme calls for all property taxes on real estate, cars and businesses to be eliminated. To replace the anticipated $8 billion in lost revenue out of the $18 billion state budget, most sales-tax exemptions would be repealed and the tax would be expanded to cover services, from haircuts to root canals.
The speaker can even claim – on narrowly technical grounds, mind you – that he isn't calling for a tax increase, since the state sales-tax rate would remain at 4 percent (the other pennies you pay at the register go to local governments and schools).
The plan's apparent simplicity could make it an easier sell to homeowners tired of seeing their tax bills rise year after year, says Alan Essig, executive director of the progressive-leaning Georgia Budget and Policy Institute.
"There are a number of ideas out there that are bad public policy, but they sound good on a bumper sticker and they probably poll well," says Essig, who has also launched a statewide tour schedule to educate Georgians on tax policy and alternatives to Richardson's plan.
It's nearly impossible to tell if the revenue shifts would balance out, because the speaker hasn't released hard numbers for anyone to crunch. The only thing down on paper is his House Resolution 900, dropped two days before the end of this past session and completely overlooked amid the ruckus of the budget battle. But Richardson spokeswoman Clelia Davis now says HR 900 is outdated and should be ignored.
Just the notion of killing the property tax is a bad idea, Essig says, because to do so would remove one of the three legs from the revenue stool, the others being sales tax and income tax. Historically, property taxes are the most stable source of revenue, while sales-tax receipts fluctuate with the economy. Georgia has tended to recover faster from downturns than states whose governments rely more heavily on sales-tax revenue, Essig says.
Another problem with the proposal, he adds, is that it will be harder on poor folks, who spend a larger share of their incomes on sales taxes than the wealthy.
(Somehow, that seems appropriate, since the plan is the brainchild of Arthur "Trickle-Down" Laffer. Apparently, no one told Richardson the '70s-era economist is now considered a discredited dinosaur.)
"There's a fairness issue because the sales tax is the least regressive tax there is," Essig explains.
Not to worry, Davis says: Her boss's plan would allow a state income-tax credit for low-income families. The bonus, she says, is that illegal immigrants pay sales tax, but wouldn't be able to claim the tax credit.
If Georgians are in the mood for tax reform, Essig says, there are plenty of other options. One is a "circuit-breaker" model – now in place in about half the country – that limits property-tax increases to a certain percentage of the owner's income. The state could make up the difference by repealing some of the tax exemptions that legislators dole out every year. State bean-counters have never gone to the trouble of listing all the countless exemptions and tallying what they cost the budget. If they did, Essig says, it's likely many of the tax breaks could no longer be justified.
"There's probably a billion dollars of exemptions that you could get rid of," he says.
Or Georgia could raise revenue by applying sales tax to more services. Most states tax about 60 services; Georgia taxes about half that number. The hard decision of what to tax – lawn care, pet grooming or accounting – will have to be made by the politicians.
But making the numbers add up is only part of Richardson's challenge. He may line up support among eager-to-please House minions, but the Senate will be a harder nut to crack. Lt. Gov. Casey Cagle, R-Gainesville, who's reputedly gearing up for his own shot at the governor's office, has dropped hints that he doesn't favor the tax plan. He's unlikely to hand his main political rival such a legislative victory.
And Richardson will have to win over GOP purists who see his plan as a slap in the face to the conservative ideal of decentralization. If the state is allowed to collect all tax revenue and then dole it back to cities, counties and school systems as it sees fit, local officials would lose the power to make decisions about whether, say, to buy extra park land or build a new high school.
"Fundamentally, Republicans have thought that government closest to the people works best," says Chuck Clay, a former GOP state party head and ex-legislator. "Among fast-growing suburban counties, there's the fear that they won't get back their fair share of the revenue."
The Georgia Municipal Association, which represents cities and towns, views the speaker's plan as an assault on local governments, explains GMA spokeswoman Amy Henderson. The idea of getting rid of property taxes may appeal to people, she says, but once they realize they'll lose control of their own communities, it won't sound as good.
"When cities and counties prepare their budgets, they hold weeks of advertised public hearings," Henderson says. "It's a very open process.
"The state budget, on the other hand," she adds, "is drafted in secret by a handful of guys in a back room and adopted in a rush by legislators who haven't had a chance to read it."
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