The densely worded tax plan with its nearly 2,000 lines of text was released to lawmakers for the first time Monday morning at a meeting of a joint committee appointed more than a year ago to work out a comprehensive revision of the Georgia tax code.

The lawmakers who had been involved in finalizing the language of HB 386 spent a few minutes that Monday giving a quick overview of the provisions contained in the bill and explaining how it was going to save bundles of money for taxpayers.

When House Minority Leader Stacey Abrams asked to see the fiscal models that were actually used to determine the financial impact of all these proposed tax changes, Rep. Mickey Channell (R-Greensboro) curtly responded, “We don’t have that available right now.” And that was that.

The joint committee met again on Tuesday morning for less than 10 minutes to vote the bill out. When Senate Minority Leader Steve Henson asked why the leadership had suddenly popped out this major tax bill so late in the session, without giving lawmakers the time needed to actually read and analyze it, House Majority Leader Larry O’Neal enlightened him.

“We’re late in the session,” O’Neal explained, “because it has taken this much time.”

It’s certainly hard to argue with that kind of logic. After the committee gave its blessing to the bill Tuesday morning, the House was debating and passing it that same afternoon.

HB 386 was rushed to the Senate, where senators unanimously voted Thursday afternoon to adopt it and send it to Gov. Nathan Deal’s desk.

Boom-boom-boom, it was done and over that quickly.

Will the revision actually be a good thing for the state and its citizens? The only answer that’s accurate is, “nobody knows.”

The small group of legislators who drew up the bill claim that it will save at least $262 million for taxpayers over the first three years. Perhaps it will. Or it may blow a hole in state revenues that is so large the General Assembly has to pass a tax increase to plug the budget hole and maintain the state’s bond rating. No one was given any hard data or analysis to make a valid assertion either way. No one was given much time to think about it, either

“It’s a lot of guesswork, a lot of assumptions, some of which may work out, some of which may not,” said Clint Mueller, a tax expert and lobbyist for the Association County Commissioners of Georgia (ACCG) who was trying to track the bill after its introduction.

“How can you draft amendments when you’re not even sure what the bill does?” Mueller asked. “It’s a flood. There’s no way we can keep up with it.”

The leadership’s emphasis was on getting a document out there and passed before anyone had a chance to read it very closely or study the numbers. In that respect, the bill’s supporters were quite successful.

We won’t know for two or three years just what this plan does or how it affects the state’s economy, but that really doesn’t matter to lawmakers. They just wanted to pass something they could call “tax reform” when they are running for reelection this year, and that’s what they did.

“This package is good news,” Deal said at a news conference after the Senate vote. “It means our state is more competitive and is a state where we can grow jobs.”

Actually, numbers released by the state Labor Department on the morning of the Senate vote on the bill knocked down all those job growth assumptions that Deal and the legislative leaders had been issuing.

Labor Commissioner Mark Butler announced that Georgia’s unemployment rate dropped to 9.1 percent in February, the lowest rate in three years.

“We created 15,600 jobs, lots of unemployed Georgians went back to work, and fewer people were laid off,” Butler said. “After back-to-back quarters of declining unemployment and continued job creation, it looks like Georgia’s businesses are trending toward a comeback.”

Georgia has gained 41,800 jobs over the past 12 months, the Labor Department said. The state’s economy seems to have turned around, finally, and jobs have already been growing for the past few months, in the absence of any new tax breaks passed by the Legislature.

The joint committee that drafted the tax plan was appointed two years ago with the objective of carrying out a comprehensive overhaul of the state’s antiquated tax system, a revision that has been needed for a long time. This they did not do, as even the bill’s supporters admitted.

“It’s not as comprehensive as I thought it might be, but it is a good package,” Sen. Bill Heath (R-Bremen) conceded.

It is not anywhere within 100 miles of being comprehensive. Rather than implementing a logical and reasoned overhaul of the state’s tax code, HB 386 is an odd collection of tax breaks and tax increases that were tossed into a bag and presented to rank-and-file legislators.

It’s rather like walking through an auto parts warehouse and picking out pieces of equipment at random from the shelves, assuming that when you’re through you will somehow be able to assemble these parts into a smoothly running automobile.

We don’t have a Maserati here. We have a random pile of nuts and bolts.

Wesley Tharpe, a tax analyst for the Georgia Budget & Policy Institute, noted:

Even with HB 386, the state’s tax system remains relatively unchanged since the 1950’s, and it no longer serves the needs of a rapidly-growing state. Georgia desperately needs fundamental tax reform. A modern tax system that strengthens and broadens the tax base will position Georgia to reverse the bone-deep cuts of prior years and invest in critical areas like education, transportation, and infrastructure that grow the economy and create jobs. HB 386 falls short of addressing this fundamental challenge, and must be viewed as merely a small step forward – and a missed opportunity – on tax reform.

The piece of the plan for which businesses lobbied the hardest was the elimination of the sales tax on energy used in mining, manufacturing and agriculture, which will be done over a four-year period.

Deal and the legislative leadership kept insisting that Georgia needed to get rid of the energy tax to be able to compete with its sister states in the region. Of course, the sales tax on energy was in full force throughout the 1990s, when Georgia was outpacing every other southeastern state during that boom period. The energy tax wasn’t holding the state back then, so it’s difficult to put much credence in the idea that eliminating it now is suddenly going to cause economic growth to skyrocket.

Of the various items tossed into this grab-bag of tax changes, there are a few that Georgians will undoubtedly enjoy.

The yearly property tax you pay when you renew your auto license tag will eventually be eliminated and replaced by a one-time title fee of 7 percent paid at the time of the vehicle purchase. Anyone who buys a car going forward will surely approve of that, although it may not sit so well with those involved in a “casual” sale of a car to another family member or a friend.

The sales tax holiday on the purchase of back-to-school supplies and energy-efficient appliances will also be reinstated for at least a couple of years, which is another beneficial aspect for the average consumer.

There are plenty of goodies in the bag for businesses, of course, but it will probably take several months to figure out exactly what they are. But rest assured, there are a bunch of them in there.

Although it was not talked about very much, the tax plan provision that could have the largest impact over the long haul is the one that will at last require online retailers like Amazon to collect sales taxes on merchandise they sell over the internet.

Retailers who operate brick-and-mortar stores no longer will have the disadvantage of charging sales taxes that their internet competitors could avoid.

“For the free market to work, everybody’s got to have the same set of rules to play by,” said Rep. Matt Ramsey (R-Peachtree City) in describing the impetus for an internet sales tax. “It’s time for us to take the lead on this as a state.”

People who buy stuff online – and I’m among them – are going to be paying higher taxes because this is definitely a tax increase. Given the growing trend of internet shopping, this could eventually become one of Georgia’s biggest sources of tax revenue. This was also the part of the tax bill that irked the tea party factions, although Republican legislators ignored their complaints in moving the bill along to passage.

“We got this bill yesterday afternoon,” conservative activist Kay Godwin said before the House passed the bill on Tuesday. “We had less than 24 hours to look at it before it will be voted upon.

Godwin wasn’t the only one who had less than 24 hours to review this complex piece of legislation. There were a whole lot of legislators who were in the same boat with her.

© 2012 by The Georgia Report

The cries were heard in the capitol hallways:  Broaden the tax base!  Flatten the tax rates!  Cut income taxes for everybody!

The tax reform campaign appeared to be an unstoppable juggernaut that would roll through the General Assembly and drop a bright, shiny bill on the desk of Gov. Nathan Deal for his signature.

The only problem was, reality intervened.

A major part of the tax revision proposal involved the elimination of most of the tax breaks and exemptions that had been granted over the years to various businesses and special interest groups.  Corporate lobbyists quickly made it clear that they weren’t going to sit still and allow that to happen.

“We got out-lobbied,” said A. D. Frazier, the retired banker who chaired a study council that drafted the tax revision plan. “It was as simple as that.”

It also turned out that facts are stubborn things.  The academic consultants and economists who analyzed the tax proposal pointed out that lowering income tax rates for businesses, which was the primary goal of the leadership, would make it necessary to raise taxes on everyone else to comply with the constitutional requirement that the Legislature adopt a balanced budget.

Legislative leaders kept demanding that the analysts run the numbers again until they came up with a more favorable outcome, but no matter how many times you add it up, you cannot make two plus two equal five.  In the end, the tax revision bill was yanked from the table by House leaders before it ever went to the rank-and-file members for a vote.

House Speaker David Ralston has maintained ever since that fiasco that lawmakers would make another attempt to revamp the tax system.  The first indications of that new campaign surfaced last week when a legislative committee held a brief meeting to lay out their plan.

Sen. Bill Heath (R-Bremen) proposed eliminating the sales tax on energy used in manufacturing and agriculture, increasing the state sales tax to 5 percent, restoring the state sales tax on groceries that was removed in the 1990s, and increasing the tobacco tax from 37 cents per pack of cigarettes to $1.37 a pack.

The revenues raised from the sales and excise tax increases would make it possible to lower the income tax rate from 6 percent to 3.7 percent, Heath estimated.

Senate President Pro Tem Tommie Williams (R-Lyons) was especially supportive of the idea of restoring the sales tax on groceries, calling the elimination of that tax “one of the biggest mistakes” of former governor Zell Miller’s administration.

“We really ought to put the sales tax back on food, which everybody pays, and put it (an income tax reduction) back for people who actually paying the taxes,” Williams contended.

With the leadership of one legislative chamber ready to move forward, you’d think that tax revision was a certainty.

That turned out not to be the case, however.  One of Deal’s spokesmen said the governor would not support tax increases on groceries or cigarettes.

The House Republican leadership also seemed a little reluctant to start mixing it up on the tax issue along the lines proposed by their Senate colleagues.

“I’m very leery of this economy we’re in now, particularly the world situation,” said House Majority Leader Larry O’Neal (R-Bonaire), an attorney with a lot of expertise in business tax law. “If you couple a big change in tax policy with what could happen in Europe . . . on a short-term basis, that might put too much pressure on small businesses.”

There is also this to consider:  because of the recent reapportionment process, many legislators will be running for reelection in redrawn districts that include new voters.  I don’t think they relish the idea of explaining to these new constituents why they voted to put a 4 percent state sales tax on the food they buy when they go to the grocery store.

For all those reasons, it would seem that revising the state’s tax laws will remain a project that will largely be set aside for others to take up some point in the future. It might be too risky to take on in an election year.

© 2011 by The Georgia Report