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Tax Foundation: Georgia 34th for Best Business Tax Climate

Mike Klein

This morning the conservative Tax Foundation released its comprehensive analysis of state tax structure policies that impact business growth.  The message for Georgia: We Can Do Better.  Georgia is ranked No. 34 nationally, unchanged from one year ago.  Georgia lawmakers continue to struggle with how to enact comprehensive revenue neutral tax reform.

The Tax Foundation annual report compares states against each other in five tax categories:  corporate, personal income, sales, unemployment insurance and personal property.  Georgia collects all five; some states do not.  With no personal income tax, Florida ranked fifth nationally.  Three states have no personal or corporate income taxes. Some states impose no sales tax.

The Tax Foundation wrote, “The lesson is simple: a state that raises sufficient revenue without one of the major taxes will, all things being equal, have an advantage over those states that levy every tax in the state tax collector’s arsenal.”  The Foundation ranked Georgia ninth best for corporate income tax, 12th for general sales tax, 22nd for unemployment insurance tax paid by employers, 39th for personal property tax and 40th for individual income tax.

The Tax Foundation said ten southern states rank ahead of Georgia:  Florida (5), Texas (9), Tennessee (14), Missouri (15), Mississippi (17), Alabama (20), Kentucky (22), West Virginia (23), Virginia (26) and Louisiana (32).  (By virtual of editorial discretion Missouri is included here because next year it plays Big Boy Football in the Southeastern Conference.)   Only South Carolina (36) and North Carolina (44) finished lower than Georgia among southern states.

It would be somewhat surprising if the General Assembly does not agree this year to eliminate the sales tax on energy used in manufacturing.  All the momentum is in that direction.  Governor Nathan Deal made it a priority. He also wants sales and use tax exemptions for construction materials used in what the Governor has described as “projects of regional significance.”

Much less clear is whether the Georgia Legislature can agree on changes to general sales and personal income taxes, which likely would be tied in a revenue neutral conversation.  The state unemployment taxes structure is perhaps the thorniest briar in the patch.

Georgia has borrowed $721 million from Washington since December 2009 to help pay monthly unemployment benefits.  Some perspective on that number; Georgia’s emergency fund is $328 million, less than half the amount owed to the federal government.  This year Georgia will also make a $33 million interest payment that will not reduce the principal amount.

Unemployment insurance benefits are funded by taxes on employers.  States set tax rates and they determine the maximum taxable wage base.  Georgia’s maximum tax rate is tied for lowest in the country and the wage base is almost lowest in the country.  More taxes paid by Georgia businesses and reduced unemployment benefits are both possible this year.

The Tax Foundation said last year the index was downloaded 487,000 times, cited in hundreds of news reports and mentioned by four governors in their State of the State addresses.  Here is a link to the 2012 Tax Foundation business tax climate index report.

Georgia Tech: “This Time We Are In the Room”

Michael Meyer, Georgia Tech School of Civil and Environmental Engineering

Georgia Tech’s Michael Meyer was understandably still pretty excited when we spoke this week while he attends a conference in Washington, D.C.  Meyer will coordinate the Georgia – Florida – Alabama, ten-university national transportation research center housed at Tech’s School of Civil and Environmental Engineering.

“I’ve been at Georgia Tech for 23 years. When we won the (regional) transportation center four years ago, that was a foot in the door to let folks know we really are good at what we do,” Meyer said.  “This time we are in the room.  I’m at this conference and everyone up here is basically saying, Georgia Tech was the big winner.”

The $7 million public-private partnership brings together seven Georgia universities plus two from Florida and one from Alabama.  The project focus will be on transportation infrastructure, safety and economic development from more than just a local perspective.  That means best business practices to reduce fatalities, how to evaluate infrastructure priorities and much more.

Meyer posed his own questions:  “How do we define success.  Is it the amount of vehicles or people who can be handled?  Is it the level of satisfaction or the level of dissatisfaction?  What we have to offer is a national and international perspective on what has worked or not worked elsewhere.”  Atlanta HOT lanes – subject of recent debate – will be on the table for review.

Meyer said the immediate challenge will be coordinating researchers from the ten universities and designing their unique projects.  He noted Georgia State has an expertise in finance while the two Florida schools – Central Florida and Florida International – are noted for research into how people respond when they use driving simulators.  The project is funded for two years with half from a federal grant and half in matching funds.  The Woodruff Foundation stepped up with $300,000.  “Woodruff was a fantastic shot in the arm,” Meyer said.

(Mike Klein is Editor at the Georgia Public Policy Foundation)

January 25, 2012 Posted by | Uncategorized | , , , , , , | Leave a comment

HOPE Should Not Become Just Another Government Spending Program

Mike Klein

HOPE, Again:  About those reports that the HOPE scholarship could face a new economic tsunami because so many Georgia kids are qualifying for the full tuition Zell Miller Scholarship:  Really?  Are these kids nothing like the 50 percent who lose HOPE after one school year?  And if we suddenly have so many super smart kids, why do our national test scores still suffer?

New proposals are already being floated to address HOPE financial stability one year after the General Assembly thought it had bought the scholarship program some time.  While all those numbers are being crunched, perhaps someone should look at why more than half lose the scholarship after one year, two-thirds after two years and nearly three-fourths after three years.

HOPE matters.  But HOPE should not become just another government spending program.

Congratulations:  Georgia Virtual School science department chair Asherrie Yisrael has been selected as a finalist for National Online Teacher of the Year.  The award has two sponsoring entities: the Southern Regional Education Board and the International Association for K-12 Online Learning.

Asherrie Yisrael, National Online Teacher of the Year Finalist

Yisrael was honored as the 2010 – 2011 Georgia Virtual School Teacher of the Year.  Her specialties are advanced placement physics, forensic science and physical science.  Georgia Virtual School (GAVS) is the state Department of Education online learning program resource.   It has about 10,000 students who select online courses from a broad-based curriculum.

Thirty-nine online teachers from 26 states were nominated for the SREB – iNACOL award.  The winner will be announced on March 1 during SREB’s virtual learning conference in Atlanta.  Other finalists are Leslie Fetzer from North Carolina and Tracey Seiler from South Carolina.

SREB and iNACOL established the national online teacher award two years ago.  Yisrael is the second Georgia teacher nominated.  Gabrielle Bray of Gwinnett County was nominated in 2010.

School Choice Rally: It’s looking like at least 1,500 will rally for School Choice outside the State Capitol at 10:00am Wednesday.  And perhaps the weather will cooperate — mild and partly cloudy!

Georgia legislators will address alternate authorization for charter schools during the current General Assembly.  The latest negative headlines include Gwinnett County again turning down a charter for Ivy Preparatory Academy whose students have an outstanding academic record, and Fulton County’s rejection of the Fulton Science Academy which was named a 2011 National Blue Ribbon School Award recipient by the U.S. Department of Education.

The Americans for Prosperity Georgia chapter will present screenings of its new film “Making The Grade in Georgia” hourly start at 2:00pm in the Georgia Room of the Twin Towers  office building directly across the street from the State Capitol.  Here is a link with more information.

Georgia Tax Climate:  Wednesday morning the conservative Tax Foundation will release its 2012 business climate index that measures how states compare in five categories: corporate tax, personal income tax, sales tax, unemployment insurance tax and property tax.  Data is based on tax policies as they existed last July 1 when most states began their new fiscal years.

The Tax Foundation ranking is not against any specific baseline.  States can move up or down even if they make no changes because revisions in other states can affect overall rankings.

The Tax Foundation ranked Georgia No. 34 nationally last year.  Foundation economists found 33 states with overall better business tax climates and 16 that were worse.  Georgia tax reform remains a work in progress this year after the 2011 Legislature was unable to enact reform.

Unemployment insurance tax gets less attention than it deserves.  Georgia began to borrow federal funds starting in December 2009 because the state could no longer afford to write unemployment benefit checks.  Georgia owes $721 million in principal plus tens of millions of dollars in annual interest.  Options to find repayment dollars include imposing higher taxes on employers and reducing benefits, which could mean fewer weeks, smaller checks or both.

The Tax Foundation business tax climate index will be released at 10:00am Wednesday.

Yellow Jackets 1, Volunteers 0:   Friday’s announcement that Georgia Tech will become a national tier one university transportation research center means the state made a better case than our nearest northern neighbor.  Tennessee would have located a national think tank at the Center for Transportation Research on the University of Tennessee campus in Knoxville.

Governor Nathan Deal announced Georgia’s plan to pursue the transportation research center initiative last May when he addressed the state Logistics Summit in Atlanta.  Georgia Tech will coordinate research by seven state universities plus three in Alabama and Florida.  Tech was also named to participate in a regional initiative coordinated by the University of Florida.

Here’s a salute to the Woodruff Foundation that provided essential local startup seed money.  The total investment for two years will be $7 million with half from the federal government.

(Mike Klein is Editor at the Georgia Public Policy Foundation)

January 24, 2012 Posted by | Uncategorized | , , , , , , , , , , | Leave a comment