Georgia considers pro-growth tax code
The Georgia Special Council on Tax Reform and Fairness, a blue ribbon panel of economists and business representatives established by the Georgia legislature last year, released its report last week. A model for Kentucky Senate Bill 1, which is awaiting consideration in the House, the council’s charge was to examine the state’s tax code and recommend a new structure that would be more pro-growth, business-friendly, and equitable. In response, the council proposes a shift in emphasis from income-based to consumption-based taxes.
Recommendations include lowering the personal and corporate income tax rates (gradually from 6% now to 4% in 2014) by eliminating some exemptions, broadening the sales tax by eliminating most credits and exemptions (including food), adding the sales tax to certain services, and increasing the cigarette tax. In order to avoid tax pyramiding, the report recommends keeping existing business input exemptions, adding a new exemption for manufacturing, mining, and agriculture, and focusing the expanded sales tax on those services mainly purchased by consumers. Any excess revenue the state receives must be used to lower income tax rates. Thus far, the report has received favorable reviews from economists, but has gotten pushback from those who feel the tax on groceries and other services is regressive. The council’s proposal now will go to the Georgia state legislature for an up or down vote.
The Kentucky Chamber favors a thorough evaluation and modification of Kentucky’s tax code that supports growth and competitiveness, reduces the cost of capital, and promotes fairness and simplicity. As tax reform in Kentucky is debated, the Kentucky Chamber stands ready to represent the business community and provide the input needed to create a business-friendly tax code.