Chief among these is HB 386, which makes a number of significant changes to our tax system. It is certainly not comprehensive tax reform in any real sense of the word, but its impact could be far reaching.
Before explaining any of the details, this is a bill for which I think a review of the process involved in its passage would be appropriate. Two years ago the legislature created a special commission to review the tax structure of our state and submit recommendations on revisions prior to the 2011 session. These recommendations were to be taken up by a newly created committee that would produce legislation incorporating these recommendations however it saw fit. Legislation coming from this committee would be exempt from the normal legislative process; it would come directly to the floor of each chamber for a vote and could not be amended. Several proposals were floated last year, but none of them reached a vote after analysis revealed they would likely result in overall tax increases on regular folks.
This session, in the afternoon of Legislative Day 34 (out of 40, remember), the special committee met and considered a bill that was then publicly revealed for the first time. The committee met again the following morning, made some minor changes, and passed the bill out to the chambers. On the House floor that morning, it was announced that the bill would be voted on that afternoon! I immediately set about trying to read the bill and learn all I could about it. However, when I tried to pull up the bill on the legislative web site by entering the bill number, what displayed was the original version of the bill, not the new version. I remained at my desk and continued trying to research the bill during our lunch break; that’s how I know for a fact it was placed on my desk at 12:20. The bill contained about 60 pages of mostly technical type language (typical for tax legislation) and was called for debate at 3:00. Folks, if that’s not a page right out of the Nancy Pelosi manual of legislative process, I don’t know what is. By rule, budgets must be on our desks for 24 hours before a vote, and legislation like this should have been given at least that long.
At any rate, I did the best I could to digest the bill in the few hours I had before the vote. I ended up voting for it and hope that was the right decision. There are some things in it I don’t like, but it also has some very good points.
First, the thing I see as potentially causing the most heartburn is changing the way we tax cars. Some folks will come out smelling like a rose, while others will pay more. It will just depend on your circumstances. The best I was able to decipher it, anyone who buys a car from a dealer will come out ahead. That’s because the new title tax (generally 7% of the value of the car and paid when the title is changed) will replace both the sales tax and the ad valorem tax (“birthday tax”) that would have been paid under the existing system. Since the title tax is about the same as the sales tax, those folks will come out ahead to the extent of the ad valorem tax they would have paid.
The question is more complicated for those who buy a car from another individual. They don’t currently have a sales tax, so for them it will come down to a question of whether they save enough by not paying the birthday tax every year to offset the title tax. This will simply depend on the value of the car and how long they keep it; some will end up saving money, while others will end up paying more. All of them, though, will have to pay a new up front tax to get a title to the car in their name.
As I mentioned, the bill does have several good points. These include revival of the sales tax holiday allowing parents to buy clothes and other school items without paying sales tax; an increase of $2,000 in the exemption allowed to married couples when filing state income tax; and a phase out of the sales tax charged on energy used in manufacturing (this moves us into conformity with our adjoining states and will hopefully help us regain some jobs in the manufacturing sector). There are other provisions in the bill, but this space does not allow me to include them all.
Should you have questions about this or other legislation, please let me know. The best ways to reach me during session are to call (404) 656-0265 or send an email to firstname.lastname@example.org. As always, thank you for the honor of representing you in the Georgia House of Representatives.