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GOP says jobs will flow from tax cuts

ATLANTA --- Tax cuts for manufacturers and lower rates on individuals are the Republicans' answer to the nagging unemployment rate that lingers above the national level and made jobs the top concern of voters last fall.

Before the legislative session began, Capitol insiders were dreading the magnitude of cuts that would be needed to balance the budget. Now the session is most likely to be remembered instead for its $200 million tax cut.

Most advocacy groups acknowledged privately that they had been expected more pain from the budget, especially since more than $1.5 billion in federal stimulus money would expire and tax collections haven't risen enough to replace it all.

They're grumbling about the tax bill unveiled Friday because they say the $200 million foregone will only make the strained budget worse.

"How many more Georgia State Patrol Troopers will have to be furloughed in the Republicans' new plan? How many more GBI crime labs will be shut down? How many additional millions in education funding will be cut from our local schools?" asks Sen. Doug Stoner of Smyrna, chairman of the Senate Democratic Caucus.

House Democratic Leader Stacey Abrams, a tax attorney by profession, added her own criticism.

"At a time when we are trying to bring jobs to Georgia by supporting the Savannah Harbor, creating a budget deficit will certainly jeopardize this project. It will also likely increase the cost of higher education by requiring deeper cuts in the state budget," Abrams said.

The University System of Georgia chancellor has said tuition increases are certain. The actual amount won't be known until the Board of Regents meets to set them.

Nevertheless, Republicans offer several reasons for their tax plan.

House Speaker David Ralston put his finger on one.

"I, for one, am tired of seeing an unemployment rate in this state that has hovered near 10 percent for some time," said Ralston, R-Blue Ridge.

Another is the long-held GOP belief that entrepreneurs instinctively know better how to use money than politicians.

"We believe leaving that money in the pockets of our citizens will stimulate jobs. It always has in the past," said Sen. Bill Heath, R-Bremen, co-chairman of the special joint House-Senate committee that drafted the tax bill.

Republicans like to point to President Reagan's 1981 tax cut and the economic boom that followed for much of that decade. Abrams counters that Reagan followed his tax cut with 10 tax increases.

Georgia GOP leaders are betting that the growing economy will accelerate as a result of a tax cut and prevent the need for drastic budget cuts next year.

Friday, Gov. Nathan Deal announced that tax collections had already improved by 10 percent in March compared to the same month a year ago.

"This positive trend will aid our ability in the final days of the legislative session to enact tax reforms that will increase our state's competitiveness and build a strong, job-creating environment here at home," he said.

But then, House Republican Leader Larry O'Neal of Bonaire attributed much of the increase to improved tax collections because the revenue rise is higher than any economic indicator he's seen. Next year's budget will have more than $20 million for added tax collectors to bolster the job-creation strategy.

That strategy is to spark jobs three ways:

- Lowering the personal-income tax rate over three years from 6 percent to 4.55. Most small businesses are taxed at their owner's personal rate, so the money not going to the tax man could go to hiring. Also, high-tech executives say a lower personal rate would help them recruit prized talent.

- Ending the sales tax on energy used in manufacturing and farming. Factory owners have complained they wouldn't owe that tax in other states.

- Realigning the tax on telecommunications. It means a sales tax on satellite television subscriptions but also reduced taxes in other areas, all in an effort to bring equity between different modes of communication, such as land-line phones and cell phones. Much of Georgia's economic growth in the 1990s came in telecom, and Republicans hope to rekindle that fire.

The bill won't tax food, Girl Scout cookies, haircuts or veterinary treatments. It will tax car repairs and limit the itemized deductions for those in the upper incomes.

For example, a couple making $75,000 would be limited to $30,000 in deductions. O'Neal estimated 90 percent of Georgians will get a tax cut.

While Illinois is raising its income-tax rate by 33 percent, the Peach State is cutting its by 23 percent. Tell every company located in the Rust Belt or California, he argues.

"Georgia has now one of the most competitive states that has income taxes," O'Neal said. "We are a shining example of lessening the tax burden on our citizens."

(Walter Jones is the Atlanta bureau chief for the Morris News Service. He can be reached at walter.jones on Twitter at MorrisNews or (404) 589-8424.)

Web posted on Thursday, April 14, 2011

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