Ashli Howell, Staff Writer
If you’ve turned on the television in the past month, you likely know that mid-term elections are coming up. You probably also know that Jason Carter is running against incumbent Nathan Deal for the Governor of Georgia and that David Purdue and Michelle Nunn are running for the Senate position left vacant by Saxby Chambliss.
There is, however, a proposed Georgia constitutional amendment that will be on the ballot this election cycle that hasn’t received very much attention. The proposed amendment will read: To prohibit an increase in the state income tax rate in effect January 1, 2015, “Shall the Constitution of Georgia be amended to prohibit the General Assembly from increasing the maximum state income tax rate.” Basically, the proposed constitutional amendment, Senate Resolution 415, would create a permanent cap on the income tax rate in the Georgia State constitution.
Although no one particularly enjoys tax increases, taxes help fund our education system, public services, and a plethora of other projects. Additionally, Georgia’s annual tax collection per capita is already significantly lower than average. According to the Georgia Budget and Policy Institute, while the average around the United States for total state and local taxes collected per capita is $4,296, the Georgia average is $3,173. With the passage of this constitutional amendment, the availability of options for tax reform would be severely curtailed. This could pose a huge problem should Georgia ever become unable to collect enough revenue to meet the public needs.
Georgia would be the first state to enact a constitutional amendment that puts a cap on income taxes, but it will certainly not be the first state to try putting a cap on taxes. California, in the 1970s, enacted Proposition 13 to cap property taxes, which, according to Governing.com, was a response to increasingly high property values. The proposition also required a two-thirds majority vote to increase taxes in any form. This left local governments relying heavily on state income taxes and eventually led to California’s $21 billion budget deficit in 2009.
A similar situation could happen in Georgia. By capping the maximum income tax, it will likely lead to an unbalanced tax system that relies heavily on state sales tax. According to the Georgia Budget and Policy Institute’s research, the reliance on sales tax revenue could cause the state sales tax to soar to nearly 12 percent.
During what has become known as the Great Recession, 33 states voted to enact certain tax increases to help deal with the economic crisis. These targeted increases helped keep those 33 states from make massive cuts in education and other important public services, according to the 2010 report from the Center on Budget and Policy priorities. If this constitutional amendment were approved, would Georgia be able to act swiftly in case of an economic crisis? What about a national disaster?
The proposed amendment’s sponsor, David Shafer of Duluth, told the AJC that the amendment would keep Georgia competitive with its neighbors for business. He cited a recent North Carolina reduction in state income tax to less than six percent. According to the Georgia Budget and Policy Institute, this law is projected to cost $700 million in revenue once it is completely implemented.
It’s important to remember when you head to the polls this Nov.4, that while this proposed amendment reads like a possible increase in taxes, it is not. The proposed amendment would create a permanent cap on the income tax rate and could potentially have disastrous consequences for our state.
