By Maria Saporta
It was an interesting juxtaposition.
As President Obama’s bipartisan debt reduction commission was presenting its ideas on how to reduce the nation’s staggering deficit on Wednesday, Georgia’s Special Council on Tax Reform and Fairness was meeting to talk about the proliferation of tax incentives for businesses.
In both cases, one thing has become painfully clear. It sure is easy to spend and give away money, but it’s a lot harder to take away government incentives or duct back programs once they’ve been established.
That’s why the President’s commission appears unlikely to receive the desired 14 out of 18 votes in support of the deficit-cutting proposals by its Friday deadline.
And that’s also why Georgia’s special council is still having to wrestle over policy issues and recommendations it will present to House Speaker David Ralston by early next year.
Council Chairman A.D. Frazier apologized to those in the audience listening to the various opinions among the members saying it was like “watching sausage being made.”
Much of the division centered on whether incentives should be used to sweeten the pot for investment decisions “in play” — (where Georgia is competing with another state on a desired economic development project); or whether they should be made available to any existing or new Georgia company that’s adding jobs.
Again, the multi-million dollar issue is that someone has to end up paying for all the incentives that are granted.
It didn’t get any better when he asked if people in the audience meeting at Mercer University’s Atlanta campus had any questions or comments.
One person suggested scrapping the entire state income tax for individuals and corporations and moving just to a consumption tax.
Frazier quickly responding that such a move would be quite risky because half of the state’s revenues are generated from those income taxes.
Gov.-elect Nathan Deal campaigned on reducing the state’s 6 percent corporate income tax by a third.
But the state’s corporate income tax doesn’t appear to be a big factor on whether companies choose to expand or invest in Georgia.
Someone close to the council said that in public hearings across the state, business executives and representatives have not expressed concern over Georgia’s corporate income tax rate. So in a state facing its worst budget shortfall ever, does it make sense to give a tax break to a sector that really doesn’t seem to care one way or another?
What is obvious is that the council still has lots of work to do before it will be able to present ideas on how Georgia can revise its tax system in a way that is fair and effective while also stabilizing the state’s financial situation.
“We have some serious numbers crunching to do,” Frazier said after the council’s meeting. But he acknowledged that they’re working under a tight deadline. “We will be completed before the first day of legislative session.”
Frazier said he expected that the council would need to meet at least one more time before it presents its report, but he said that no meeting has yet been scheduled.