Income Tax Elimination Plan Is Bad Politics

This week’s Courier Herald column:

It has long been a theme of this column that campaigns are antithetical to governing. The polarity of partisan bases continues to push candidates into untenable positions that are demanded by voters but lack sufficient grounding in reality for legislation and implementation.

Policy nuances rarely fit on a bumper sticker, and are never, ever as clean as a campaign pitch. And yet, voters internalize slogans as economic truisms. Candidates seem shocked when their own voters expect exactly what they were promised. It’s a cycle that continues to repeat itself, expanding public cynicism of the system in which we govern ourselves.

For several weeks we took a look at an expected promise from some GOP gubernatorial candidates. Specifically, that Georgia’s income tax will be replaced to make us “more competitive” with states like Tennessee and Florida. This weekend, that pledge became discussion in the first forums for Republican candidates.

We’ve covered in detail the many reasons why the asterisk needed to explain the nuance of this pledge shows why this is bad policy. Today, we’ll expand to discuss why it is bad politics.

The promise to eliminate income tax is, first and foremost, consultant driven pandering. It preys on the latent Republican truism that all taxes are too high, regardless which government entity is doing the taxation or how the money is being spent. If the question is asked in a vacuum, every rational human will always choose to pay less rather than more.

The problem comes when you understand that the state government isn’t the federal government. We can’t have a philosophical debate over less taxes versus more spending, only to have leaders pat themselves on the back for reaching across the aisle to let both sides win. State and local government budgets must be balanced. Every year.

The sleight of hand comes with the unspecified asterisk that we will “broaden the tax base” to make up the needed revenue to replace half of the state’s annual budget. It’s easy for a fast talking politician to make a captivated audience that wants a tax cut that the burden will fall on other people.

Their consultants likely haven’t told their candidates that they can expect direct mail saying “Candidate X wants to increase taxes on seniors”. It’s a charge that should have little problem standing up to a fact check challenge, in the absence of any additional details from these candidates.

Georgia already exempts $130,000 of investment and retirement income from retired couples. Kiplinger.com already counts Georgia as the fifth most tax friendly state for retirees. Many retirees already are exempted from most if not all of their state income tax. They stand to benefit nothing from these bold campaign pledges.

Retirees do, however, buy groceries that would almost certainly see their exemption eliminated to pay for a broader income tax cut. Retirees pay for services that would likely have to be added to the taxable sales base in order to pay for income tax cuts. And, of course, retirees, like all of us, should expect to pay a higher state sales tax rate in order to replace the half of the budget that is proposed to be eliminated with only scarce details of where replacement revenues will come from.

The bad policy becomes bad politics when you consider the age distribution of voters. Older voters show up at the polls in much heavier numbers than their younger counterparts. Wealthy retiree votes skew Republican in significant numbers as well.

At least two of Georgia’s candidates for governor are following a strategy to pander to their base, only to have a large part of the GOP base soon realize they will be paying more, not less, to the state in taxes. They will likely bristle at this charge, as their debate remarks were peppered with references to doubters in the political class saying it can’t be done.

If “having read the state budget” makes one part of the political class, consider me guilty. One would hope one who has taken the oath of office to serve in the Georgia Senate would be equally guilty, and have the same appreciation for the basic math involved in tax policy.

The series of columns written on this subject were done for a very specific reason. I’ve shown my work. Those who would pledge to completely restructure Georgia’s revenue structure which has garnered a AAA bond rating and $2.5 Billion rainy day fund should bear the same responsibility to tell voters, in specific detail, how they promise to meet their pledge in where these funds will come from.

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J. Wagon
J. Wagon

From this AJC Article, it looks like Michael Williams, Hunter Hill, and Casey Cagle are for moving to a TN/ FL model. Michael Williams is trying to rewrite recent history, so people won’t challenge Williams on why he should retain any credibility, after shoring up support for Trump early on, despite his behavior, disparaging views on blacks and women, remarks, lack of fitness, immaturity as a christian, being a freaking new jersey real estate developer, nor offering to pay the legal fees for a white man who beat a black man at a campaign rally. Will Michael Williams make the… Read more »

xdog
xdog

You didn’t mention a common rationale candidates offer to justify cutting taxes, that the state can cover any shortfall by eliminating waste and inefficiency in government. I’ve heard that one several times already this year. That’s real pandering.

Rambler14
Rambler14

Doesn’t Florida basically make up the lack of state income tax by much higher property taxes and increased tourism $?

Ellynn
Ellynn

General Questions;

If the new federal tax reform as currently ‘written’ goes through as drafted, how will the lose of being able to write off local taxes effect income tax states vs. sales, local, and property tax states?

If the budget as drafted by the White House passes, states will be losing federal dollars in – how would we make up the loses in a no income tax/cutting your taxes environment?

Saltycracker
Saltycracker

Why not get on the table different approaches for corporate and individual tax reforms?

It’s all about politics now.

GeorgiaMoJo
GeorgiaMoJo

If not having an income tax is such bad policy, why are FL and TX (2 states w/o income tax) thriving and, according to the American Legislative Exchange Council, have more than 1/2 trillion $ of GDP migrated from high income tax states: IL and NY to FL and TX? Now a 2nd GA border state, TN, has chosen to eliminate its income tax by 2022. I guess they must be crazy too. The impetus behind eliminating income tax is not consultant driven pandering, it’s based on the need to create a tax code that encourages work and investment. Those… Read more »

Bodhisattva
Bodhisattva

Tn. is also the most regressively taxed state in the nation and has an average 9.46% sales tax across the state with no exemptions for food or clothing. They also do have an income tax on unearned income, although the Republicans are pushing to eliminate this too. If they do, the sales tax will almost certainly have to go even higher. What they’ve basically done is like the GOP has done nationally, cut taxes on the ultra rich at the expense of the middle class, working class, and poor. Welcome to the oligarchy.