Report: Taxes are still a problem for Georgia

Georgia’s economic ranking relative to other states has become a central part of this year’s gubernatorial election. While we rank high in job creation, our unemployment rate has been the nation’s highest for two straight months. So it has been somewhat strange that our tax structure has been largely ignored in that debate. Gov. Nathan Deal touts the package of changes made two years ago. The little bit of tax talk coming from his Democratic opponent, Jason Carter, has amounted to a promise not to raise them, and perhaps to expand some business incentives to smaller firms. The Libertarian, Andrew Hunt, has talked about lowering the individual income-tax rate, but his impact on the race has been so negligible that he hasn’t even gotten the two leading candidates to address that idea.

Now comes a warning that perhaps tax policy ought to be more of a concern for Georgia than this election would have you believe.

The Tax Foundation today released its annual State Business Tax Climate Index, which looks at the entire tax structure of each state on the premise that the entire tax picture matters to companies and entrepreneurs, not just direct business taxes. And once again, Georgia lands in the bottom half nationally — this year, at 36th.

Before we continue, let’s get one thing out of the way: Taxes aren’t the only thing that matters to businesses. As the Tax Foundation’s report puts it:

“Other concerns, such as raw materials or infrastructure or a skilled labor pool, matter, but a simple, sensible tax system can positively impact business operations with regard to these resources. Furthermore, unlike changes to a state’s healthcare, transportation, or education systems, which can take decades to implement, changes to the tax code can quickly improve a state’s business climate.”

Not only that, but taxes are one easily identifiable way for those supplying capital or labor to compare one state with another. And even in a globalized world, the report says, state vs. state competition remains paramount:

“The Department of Labor reports that most mass job relocations are from one U.S. state to another rather than to a foreign location. Certainly job creation is rapid overseas, as previously underdeveloped nations enter the world economy without facing the highest corporate tax rate in the industrialized world, as U.S. businesses do. State lawmakers are right to be concerned about how their states rank in the global competition for jobs and capital, but they need to be more concerned with companies moving from Detroit, MI, to Indianapolis, IN, rather than from Detroit to New Delhi. This means that state lawmakers must be aware of how their states’ business climates match up to their immediate neighbors and to other states within their regions.”

On both of those last two points, Georgia is suffering. See this map:

TaxFoundation-2015-SBTCI

Among our immediate neighbors, you’ll notice only South Carolina (ranked 37th) has a worse tax climate for business than Georgia does. And most of the other states that border Georgia are markedly better: Florida is fifth, Tennessee is 15th, and North Carolina is 16th after moving up a whopping 28 spots this year thanks to a wide-ranging tax overhaul. (Alabama is 28th.)

What’s more, other states with which Georgia is often compared also fared better: Texas is 10th, Colorado is 20th, Arizona is 23rd, and Virginia is 27th. We even fare worse than Midwestern states such as Indiana (eighth), Michigan (13th) and Illinois (31st).

Let me say that again: Our business tax climate is slightly worse than that of Illinois. And that’s without taking account of a decrease in taxes, which were raised in 2011, scheduled for 2015.

And we rank so low in spite of relatively good scores on corporate taxes (eighth) and sales taxes (17th). Our property-tax rank is middling, at 30th. But our unemployment-insurance tax puts us 36th, and most important, our individual income-tax ranking is poor at 42nd.

Not only does Georgia have a relatively high top marginal income tax rate at 6 percent. That rate also begins very low: at just $7,000 of taxable income for single filers. Consider where some other states start their 6 percent tax bracket: Arkansas $20,700; California $28,372; Connecticut $100,000; Kentucky $75,000; Louisiana $50,000; Montana $13,000; South Carolina $11,520; West Virginia $40,000. (Brackets are different for married couples in most cases, including Georgia.) The only other state to tax an individual’s 7,000 taxable dollar at such a high rate is Oregon, at 7 percent. Every other state is lower than Georgia’s 6 percent rate for that level of income.

Georgia Republicans want to pretend tax reform has been done, and Georgia Democrats would prefer not to talk about it at all if it means shifting toward consumption taxes, even if those are less prone to distorting economic decisions. But if our state’s economy is going to become indisputably strong, we’re going to have to address this issue.

Reader Comments 0

99 comments
MarkVV
MarkVV

Memo to all those Gurley apologists (which notably includes Kyle): Life is not fair.


Why all this ruckus about Gurley? Because he is the darling of the graduates of UGA and other Georgia people who love college football and prefer the Bulldogs. Why don’t we start reexamining, for instance, all the criminal punishments of all the offenders to see if everybody got the same punishment for the same offense, and if those punishments have been appropriate?


As a matter of fact “rules are rules” is a very appropriate statement for Gurley’s case.That does not mean that rules should not be reexamined and, if appropriate, changed.But it is hypocritical to make that much fuss just because  your favorite football player got caught and punished.

MarkVV
MarkVV

“Raise taxes through the roof and watch the economy take off...

...according to liberals, anyway.”

Except – they do not say anything like that.

notagain
notagain

State pays insurer despite negative audit

Under pressure to expand health care choices for teachers, retirees and employees, state officials agreed this summer to let a politically connected insurer offer coverage again, even though auditors said the company had previously overpaid providers in the State Health Benefit Plan nearly $23 million.

Really can we afford Deal???????????along with the copart/ethics cost over 100 million wasted taxpayer money.Think please Think....

stogiefogey
stogiefogey

The low starting point for the 6 percent tax bracket is ironic in a state governed by Republicans. 

They hold themselves out as the champions of free enterprise, small government and low taxes but at the end of the day they're no better - maybe even worse - than the other guys.

Don't Tread
Don't Tread

Raise taxes through the roof and watch the economy take off...


...according to liberals, anyway.


The real solution is to rescind the PNTR agreement with China (they're not keeping up their end of that deal anyway).  Good luck with that.

straker
straker

Rafe - "I get it that you don't get it"


Companies can keep jobs in America and make a good profit.


Or, they can outsource to China and make a great profit.


So, when it comes to patriotism and loyalty to the American worker versus a GREAT profit, money wins out nearly every time.


I get it, all right.

MarkVV
MarkVV

“Shocking Video Shows NASA Rocket Exploding on Launch

Your tax dollars^^ at work.”

Forgot to mention that it was private contractor’s rocket, didn’t you?

RafeHollister
RafeHollister

@MarkVV So, NASA has no obligation to protect taxpayer resources, $200 million in this case?  They selected the contractor, work with them daily, approve their blueprints, coordinate with them on parts and supplies, and evaluate their performance.

MarkVV
MarkVV

@RafeHollister @MarkVV 

Rafe,

All that to make excuses for the private contractor? Does he not have the primary responsibility? My point is not that the private industry is bad, that those who attack the government’s performance and praise the private enterprise always forget that both make mistakes. To attack NASA because a private contractor’s rocket has failed is such an example of irresponsible writing.

straker
straker

I Greatly Whine  -  "I thought those guys were rocket scientists"


They are.


Apparently you also think that launching rockets is a 100% guaranteed science.


No surprise there.

straker
straker

Rafe - "that is not what he said"


1. He said he's spent most of his career outsourcing.


2. He said we are lacking in jobs because of Obama's bad policies.


3. He said he's proud of his outsourcing.


Hard to draw any other conclusion.

RafeHollister
RafeHollister

@straker Well, he is proud because he saved some companies and some jobs by making the companies competitive.  I get it that you don't get it, that you would not outsource and let the companies become defunct.


Obama's high taxes and overwhelming regulations he feels, contributes to American companies not being competitive in the world economy.  Obviously you don't get that nuance either.

straker
straker

I Greatly Whine


Let me guess.


When David Perdue says, in effect, that he had to outsource jobs to China because of "Obama's bad policies", you actually believe that.

RafeHollister
RafeHollister

@straker That is not what he said, why do you need to build a strawman argument.  He outsourced to make the companies competitive with the competition, which saved some jobs, rather than keep the jobs here, be non competitive, and the company going bankrupt.  Supply and demand seems to be something you progressives struggle with.  You can make all the American made products you desire, but if no one buys them, because of the cost, what have you gained.

Hedley_Lammar
Hedley_Lammar

@RafeHollister @straker He outsourced to make the companies competitive with the competition,


No he didnt...He outsourced to make himself and the folks at the top rich....

straker
straker

I Greatly Whine


So, if a rocket blows up, that means global warming must be a hoax?


Did you fundamentalist youth pastor tell you that?

Chris30338
Chris30338

@straker Even better is that the rocket engines used were Russian made. Only in the minds of gullible idiots could people equate this with climate change. LOL!

straker
straker

Yes_Jesus


If you'd bother to actually read the words of Jesus, you'd learn to love your enemies and turn the other cheek.


Harsh insults aimed at Obama is most definitely NOT Christian.

Yes_Jesus_Can
Yes_Jesus_Can

Heard on NPR this morning, our president bamster, scolding the nation and the governors for even indicating that quarantines would be a part of their plans to address the threat of ebola. 

That's what 0bama is, our national ivy-league educated, raised by marxists snob and know-it=all. 

Does 0bama do anything when he opens his mouth besides this?  Leftists or anyone, I welcome your answer. 

Hedley_Lammar
Hedley_Lammar

@Yes_Jesus_Can I'm glad we have a President who listens to the experts at the CDC.


You know...the people with actually experience dealing with Ebola and TB etc.


Instead of becoming a Chicken Little and thinking just because im a governor now i'm somehow a doctor.


Quarantines don't work....We know this already.

RafeHollister
RafeHollister

@HeadleyLamar @Yes_Jesus_Can I wish that were true, that he listens to anyone.  I think he dictates.  Find some instance where he listened to any expert, military, education, economic, health, etc.  Quarantines are and have always been an effective way of dealing with contagious diseases.   They are used throughout the world and were used in Nigeria and Liberia, which eliminated Ebola. 


For the first time we have allowed politics to be included in the decision.  We have put "stigmatizing" Africans ahead of public health.

SockPuppet3
SockPuppet3

sounds like no more Democrats if taxes are already too high; they need more taxes for more free stuff for underachievers

RantNRave
RantNRave

@SockPuppet3


"more free stuff for underachievers"


AND THAT INCLUDES YOU CONS.


FREE STUFF HAS NO POLITICAL AFFILIATION.


DUH !!!  

Yes_Jesus_Can
Yes_Jesus_Can

RantNRave achieved his goal, I believe, which was to say something so inane and ridiculous that no one would argue further. 

Good job RNR, the official government office of compliance with government communications approves and recommends your continuing bureaucratization. 

AvailableName
AvailableName

8 and 42 give us a 36 on the tax meter. Regardless of what it all means going down the road, it's interesting how our politicians value flesh and blood people and corporate "people."

Aquagirl
Aquagirl

@RafeHollister It's behind a paywall so I can't say much about the piece but I will say this: it's an opinion piece by somebody like Kyle (no offense to him) who writes on a topic and moves on. She's not gonna lose her job over her article.


Those 100 GOP'ers on the other hand, are committing political suicide if they're wrong about Brownback's policies being a big flop. Stepping outside your party to endorse a Democrat? Their rear ends are on the line, unlike the WSJ writer from your link. I'll bet on their level of knowledge against a one-off opinion writer any day. YMMV.




RafeHollister
RafeHollister

@Aquagirl It is definitely going to be interesting in KS, the conservative GOP voter, or the establishment big government GOP backed Democrat.

TicTacs
TicTacs

Working people complain about their pay,  rich people complain about their taxes even though they have more.

EconoPol
EconoPol

Consumption taxes are much more prone to distorting economic decisions. The price elasticities of demand are much higher for consumer goods than for income. But don't let actual facts get in the way of conservative dogma.

RafeHollister
RafeHollister

I say raise that $7,000 lower limit where we start taking the 6% to $75,000 and add a penny to the sales tax to catch a little more of the black market economy.  Proggies should like that, the poor wouldn't have to pay state income tax.   Totally exempt most common groceries (not crab legs and caviar) and drugs from the sales tax.

CommonSenseisntCommon
CommonSenseisntCommon

I agree sales taxes are the problem. They should be no higher than 1% in honor of the 1%ers LOL

crankyoldman
crankyoldman

The first three years I lived in GA, from 1996-99, I was active duty military, and still paying taxes to CO.I don’t recall them being especially onerous.I stayed in GA after leaving active duty, and worked a job that started with low pay, but had regular raises and chances for promotion.A few years back my wife went back to school and then back into the workforce as an RN, once the kids were old enough that she didn’t need to be a full time mom.Our income has steadily increased, and we’ve made over 6 figures between us for the past couple of years.But we’ve got two kids in college now, and three more behind them, so it doesn’t feel like I thought it would to be making this much.In any case, I remember a few short years ago when we were barely getting by, and the GA income tax seemed fairly oppressive.But now that we are in a higher bracket, we hardly notice it.So, yeah, I’d agree with Kyle that the rate is too high at the bottom end.But I also think there is room at the upper end, which statistically speaking would include me, for the rates to go a bit higher to keep the roads repaired, fund public schools, keep police on the beat, etc.I’ve always thought that when I finally make enough money that I feel compelled to complain about my taxes, then I can relax, because it means I’ve made it.LOL

JohnnyReb
JohnnyReb

"....Georgia Democrats would prefer not to talk about it (tax reform) at all if it means shifting toward consumption taxes."

Now Kyle, you know those bleeding hearts just can't bear telling their base someone other than the 1% must pay taxes.