A GREAT plan for Georgia: The elimination of all property taxes
The No. 1 complaint I heard last summer as I went door-to-door campaigning for the state House of Representatives seat for District 137 was about how absurd our property tax evaluations were. In Bibb County, it was an embarrassment for us all, and worried many of us, including me, when looking at prospects of much higher property taxes.
Well, the leadership of the Georgia House of Representatives believes the time has come to eliminate all property taxes, and I believe the people of Georgia should be given an opportunity to vote on a constitutional amendment to repeal all property taxes.
That opportunity could come in November of 2008 if the General Assembly will agree that Georgia’s economy should be based on the exchange and receipt of money and not taxing property.
When HR 900 was originally written, it was intended simply as a framework to open debate, gather ideas and obtain input. Since then, we have received complaints, suggestions and opinions from citizens all across the state, and that is exactly what we hoped would happen.
From the beginning of this process, the goal has been to eliminate all ad valorem and property taxes in Georgia. The details of exactly how we reach that goal have changed and will continue to change as we weigh the best options for our state, but one thing is clear: The current property tax system is outdated, unfair and excessive. How many of us have hated to pay taxes on our vehicles every time our birthdays roll around?
Georgia is divided into 159 counties, each with the power to tax their residents. One-hundred and eighty school districts and more than 500 municipalities also have the power to tax. But that power goes beyond simply collecting taxes. Rather than determining the amount of money they have and then creating a budget, as Georgia’s families do every day, a county can simply determine how much money it needs and then decide how much to charge its residents.
If a county or school district decides it need $50 million, all it has to do is determine where to place the millage rate to raise the $50 million. If times get tough, they simply raise the millage rate rather than tighten their belts like working families must do. The system is completely backwards.
The biggest part of the problem is that property taxes are increasing faster than personal income. Since 1990, personal income has increased 146 percent while property taxes have increased 176 percent. Even though people are not earning more income, the government is requiring that they pay more taxes.
A family can live in a home for 30 years and suddenly find they cannot afford it any more because their property taxes have increased so much. They are not requiring any more services from their local government, and yet, that government keeps taking more and more money from them. The biggest asset most people have is their home; it’s the American dream. If they can’t pay, they lose their home and their dream.
The current property tax system was created when we were an agricultural society and people made a living off of their land. The last overhaul of the system was 70 years ago, and since that time our economy has changed significantly. Homeownership has increased from 30 percent to 70 percent. We have moved from an agricultural society to a service-based, as has the rest of the nation, and yet, we do not tax services at all.
It is the 21st century. It is time to go to a system that taxes the receipt and exchange of money, not the ownership of property. It is time to eliminate property taxes.The proposal is called the GREAT Plan, which stands for Georgia’s repeal of every ad valorem tax.
The GREAT Plan calls for a sales, use and service tax of 4 percent. This is the same percentage as it is currently, but sales tax would now be added to services.
It also calls for an elimination of all sales tax exemptions that special interests have accumulated over the years. By taxing services and eliminating most, if not all, exemptions, we can generate the same amount of money being generated from the property tax, and we can eliminate all property taxes in Georgia.
Yes, this means that now legal fees, CPA fees, medical expenses and other services (like painters, landscapers, carpenters, etc.) will have sales tax added to the total, as well as groceries. But lawyers, accountants, and physicians will not be paying property taxes on their buildings or assets, so their cost of doing business should go down.
Vendors, such as landscapers, will no longer have to pay ad valorem tax on their vehicles. As for groceries, every Georgia citizen who fills out an individual Georgia Income Tax return will be given a refundable credit equal to the amount of the estimated sales tax paid. It goes without saying that those people who are not legally within the United States, those traveling through Georgia, and those who illegally pay no taxes will then be paying sales tax and not be getting the refundable credit.
It should be noted that there will not be sales tax on the sale of real property. So you will not pay sales tax if you sold your home, or any real estate. The question has been asked, “Will we still need a Tax Assessor’s office?” Under the current proposal, there would not be a need for this position, unless the county decided to maintain the office until bonded indebtedness (if there is any) is retired.
If a local community has voted to tax themselves with a local bond issue it is only fair that that local community retire their debt. So property owners in that area will continue to receive a tax bill under the current system until the debt is paid off.
Local counties, cities and school districts will be guaranteed to receive not less than the amount they are currently receiving. If local control is what a community wants, they may continue local option sales taxes such as the SPLOST and ELOST, all of which will continue to be determined by the vote of the citizens.
A dialogue has opened in our state on serious reform of taxes so that Georgia may lead the nation. I realize there will be lots of questions about this proposal, including many from me as well, so I welcome any and all discussion and debate about tax reform and HR 900.
Over the coming months, hearings will be held and we will continue to seek advice. You can email me at allen@allenpeake.com or visit my web site at www.allenpeake.com. I look forward to hearing from you and working together to make Georgia a GREAT place to live, work, and raise a family.
Allen Peake represents District 137 in the state Legislature.
