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August 28, 2005
Increase the Sales Tax?
One of the most absurd arguments in favor of increasing sales taxes to fund education is the idea that tourists and people driving through the state will be paying for our children's education instead of us. I can't find an exact number for Georgia, but I'd estimate that tourism brings in somewhere in the neighborhood of $15 billion annually.
At an extra 3% of tax revenue, that's a net benefit of $450 million a year. That's not that much -- it's about the amount of money that Gwinnett County currently raises in property taxes. But here's the kicker, unless I (and other Georgians) go on vacation in Georgia, every tourism dollar we spend in other states is subtracted from education funding.
Now, maybe Georgia has more people vacationing here than it has residents vacationing in other states. I can't claim to know. But it would be foolish to count the money people from other states are spending here without acknowledging that a lot of it is offset when Georgians shop in other states.
And if I live in Dalton, Valdosta, Augusta, Hartwell, Columbus or any other town near the border, you better believe I'd go to a neighboring state (with a lower sales tax rate) to purchase a television or similarly high ticket item. And if I were a Best Buy or Circuit City and I had a choice of locating a new store in a Georgia border town or a neighboring state, I'd pick the neighboring state.
At another date, I'll go into some other bones I've got to pick. One is the idea that only "property owners" pay property taxes. I currently rent an apartment from Post properties (I'm buying soon) and what do you know, I looked at their annual report and they pay a substantial amount of property taxes. According to conservatives, businesses don't really pay corporate taxes, they pass it on to their customers. Well, if that's true, don't landlords just pass on property taxes to their tenants? Renters in particular could get hit hard by a shift in property taxes. If their landlords no longer have to pay them, do you really think they'll pass on the savings to those who rent? Not likely.
Another simple math problem: When I move into my condo, I'll probably be paying around $1,800/year in school related property taxes. If, as the AJC article suggests, I could see my property taxes cut by 2/3, that would mean for funding to stay the same (really it needs to be increased for much of Georgia) I'd have to pull in $1,200 of extra sales tax revenue for the state. At a 3% rate, I'd have to spend $40,000 a year at the cash register. In actuality I spend closer to $20,000 (that's a high estimate), so really you'd need a 6% rate, and to eliminate all school related property taxes (which is what voters would demand) it would have to be closer to 9%. And then because I'd be spending so much extra on taxes, I'd really only be spending about $18,000/year now, which would require a 10% rate to raise the necessary money to eliminate my property taxes. Add on the fact that I'd lose my federal tax deduction for property taxes paid (and could see the value of my condo collapse) and the real rate would be closer to 12 or 13%.
So lets see, we'd see DeKalb sales taxes go from 7% to 20%. Sounds like a real good deal, especially if I needed to purchase a new car, television, computer, etc. Kudos to Mark Taylor for coming out against this latest Republican scam which will either lead to drastically higher taxes, enormous cuts to education funding (when our schools are already last in the nation) or more likely: both.
Posted by Chris at August 28, 2005 03:52 AM
Comments
Having lived in Tennessee, I can tell you first hand the no income tax model is a bad one. There were constant budget shortfalls because the revenue stream is a lot more volatile. One of them almost shut down summer classes at UT, which would have forced me into a fall semester to take ONE class to graduate. Then there's TennCare to think of, whoa boy...
Posted by: rusty ![[TypeKey Profile Page]](http://www.chrisishardcore.com//nav-commenters.gif)
at August 28, 2005 07:19 AM
And don't forget after our taxes raise to 20% then the push for the fair tax can raise that amount to 45%.
Posted by: Melb at August 28, 2005 05:41 PM
This madness has to stop somewhere. It's amazing the amount of Greed that Georgians will tolerate before they say "enough".
Posted by: Tim at August 30, 2005 07:33 PM
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