Georgia Speaker of the House Glenn Richardson was hosted by the Statesboro Chamber of Commerce recently to discuss the speaker’s tax reform plan — GREAT. Standing for Georgia’s Repeal of Every Ad valorem Tax, the speaker’s plan calls for the elimination of all property taxes in favor of an expansion of the sales tax — without an increase in the sales tax rate.
After an introduction by Georgia Rep. Bob Lane, Richardson began to explain his program. He talked about the resistance he’s faced at the local level and mentioned that Arthur Laffer was an economic advisor. Then, after showing the audience that property tax receipts increased $1.5 billion in one year (2005 to 2006), he explained how he selected the property tax.
“I picked the property tax, because I believed the way we have the property tax in place suits the situation to allow spending to keep growing out of control,” said Richardson. “We are growing more rapidly at the local level than the ability of people to pay for the services. It’s on the back of homeowners and property owners, not the 9.4 million Georgians. All I’m asking is to shift from a system that taxes dirt to a system that taxes the receipt and exchange of money.”
Richardson outlined that all property tax would be repealed including personal and commercial property, automobiles, trucks, boars, inventory and even planes. It would be replaced by removing most of the 127 different exemptions from the sales tax, on services like attorneys, accountants, lawn maintenance and groceries. Taxes on groceries and prescription drugs would be eligible for a tax exemption on Georgia individual tax returns.
Throughout his talk, Richardson focused on the fact that homeowners — 1.9 million in Georgia — bear the majority of tax burden in the state.
“Let’s use this scenario: I inherit $100,000 today and so do you. You go buy a house with yours and I put mine in stocks, bonds or in the bank in a CD,” said Richardson. “You’ll take your $100,000 and pay taxes every year and if you don’t, we’ll take your house. I’ll pay no taxes except on the income I get from the interest or dividends.”
“Now, when you sell the house — if it’s an investment property — you’ll pay capital gains. When I get rid of my CD or bonds, I’ll pay a capital gains tax — but I’ll be about $1,000 per year better off because you’re going to pay taxes every year.”
After his talk he fielded questions from the audience. The first question asked what happens when there is a downturn in the economy.
“Government will have to do what every other citizen and family did when they have less money — tighten your belt. You’ve got to cut something back. Yes, you have to have layoffs. I’m convinced that economic downturns are good for government because it’s the only time government’s going to cut. ... Listen, I am government. You give us a billion, we’ll spend it. You give us 10 million, we’ll spend it. If you give us 20 billion, we will spend every bit we get,” said Richardson.
“And the only time we are forced to cut is when we don’t have enough money. And I say that’s the way it ought to be. When citizens have less money, government ought to have less money, and we ought to have a partnership. Who is government anyway? It’s nothing more and nothing less than us together.”
Richardson was also asked to explain how a consumption tax could be voluntary if there are certain needs that must be met in order to raise a family.
“We both make decisions as to what we want to purchase. Everyone makes decisions and a consumption tax recognizes that those who have less money will spend less money and those who have more will spend more,” he said. “It’s fair because it places the tax burden over all citizens, not just a select group.”
The final question the speaker received discussed local control and inquired about unfounded state and federal mandates — particularly in education — and how local school boards would raise needed revenues.
“One of the things I’m most passionate about is: I can’t stand it when we put the same rules on every system. I am prepared to do two things: One — you will not have to comply with any mandate that we don’t fund. Two — I’m prepared to give local jurisdictions flexibility. Education is where we need to be doing it. We need to be providing local jurisdictions the flexibility, and if they’re graduating students and if they’re advancing them and showing progress, we ought to let them do whatever they need to do,” said Richardson.
“I’m signed on to that — however you want to word it. I think we ought to simplify that. We ought to let local school boards educate their kids in their community the way they think best.”