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Big tax-reform solution will be difficult to implement

ATHENS, Ga. -- The riddle of tax reform: The more it's needed, the harder it is to pass it.

Members of the state's tax reform council are trying not to think about that as they develop their recommendations, leaving the political tactics to the politicians.

A.D. Frazier, the chairman of the 11-member council, frequently quips when asked by reporters, "The lawmakers are in marketing. We're in production."

The politics of tax reform are very much on the minds of lawmakers.

Last week, Georgia lawmakers were all together for the first time since the November elections for a conference held by the University of Georgia's Carl Vinson Institute of Government. Many of their conversations involved speculation about the council's reform recommendations, due, which are Jan. 10.

House Majority Leader Larry O'Neal is the chief marketing officer for this unknown reform package, and he's harboring no illusions about the chore he could have in his maiden session as leader of the majority caucus.

"The more aggressive the package of reforms, the more difficult it will be to pass it through the General Assembly because there are going to be issue-oriented people, as there always are, in a General Assembly," he said. "If it doesn't come to us in a pretty general package, it's going to be very difficult, with the various advocacies around the state, to get an up-or-down vote with no modification."

The law creating the council includes special instructions on how the recommendations are to come before the Legislature, and amendments aren't allowed.

The law borrowed an idea from the Base Realignment and Closure Commission established by Congress to identify which military installations to close. Parochial considerations since World War II had prevented Congress from shuttering the hundreds of bases around the country that were no longer needed, so the BRAC Commission took the heat as long as its list couldn't be changed when Congress voted on it.

A similar effort by President Obama to deal with the national debt isn't meeting with the same success. That commission recently recommended steps that ranged from raising the retirement age to ending the deduction for mortgage interest, thus angering every niche of the political spectrum. And Congress watchers are betting most won't fly.

At the Athens gathering, the chief economist from Standard & Poor's, David Wyss, said states can't effectively use fiscal policy to stimulate the economy because they have to balance any tax cuts with spending cuts. Frazier responded, "I couldn't disagree more."

Gov.-elect Nathan Deal used his speech to the lawmakers to recount a conversation with a friend who is considering an 8,000-job expansion of his business in another state to avoid Georgia's taxes.

Deal and Frazier both said they want to shift the tax burden from income and business inputs to consumption by the end users.

"That is the code word for a sales-tax increase," Deal told reporters when pressed for details.

Frazier says it's coincidence that the council and Deal are saying the same things. The politicians aren't issuing secret instructions about what to put in the recommendations.

"I asked David Ralston, the (House) speaker, before he appointed me, 'Do you want us to think small or think big?' He said he wanted us to think big," Frazier said. "That's what we're trying to do."

Big ideas are likely to make O'Neal's job that much harder. Reducing or eliminating taxes that businesses pay -- and pass along to their customers -- for raw materials and energy will require that consumers see higher taxes, or more services getting taxed. It could even mean taxing groceries again.

As the reform thinking gets bigger, it means more trading off one group of taxpayers for another. That also hampers O'Neal.

"I don't think I can sell a tax code that picks winners and losers within our own Georgia society," he said after Frazier finished his remarks. So lies the riddle: the bigger the solution, the harder it is to implement it.

(Walter Jones is the Atlanta bureau chief for Morris News Service. He can be reached at walter.jones@ morris.com, (404) 589-8424.)



Web posted on Thursday, December 23, 2010













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