It's the revenue, stupid.
Martin did a good job laying out the case for the tax reform proposals put forward by Democrats in the Georgia General Assembly, and I agree they're long overdue. As he pointed out, all they do is simply adjust the existing income tax levels and update them to reflect the existing levels of income in the state. A higher level is inserted at the top for folks making $400,000 per year, and they pay a marginally higher rate ...
Under the current structure, a family making Georgia's median income of $49,080 pays $2,574.80 in state income taxes. And, under the Democratic proposal, a family making $49,080 would pay $2,574.80 in state income taxes. A middle class family with two incomes, bringing in a respectable $100,000 a year currently pays $5,630.00 in state income tax. Under the Democratic proposal, that same family would owe $5,630.00 in state income tax. A successful enterpreneur who brings in $375,000 will pay $22,130 in state income tax this year. Under the Democratic plan, she will pay - say it with me now - $22,130 in state income tax.
Given that Georgia has, in theory, a progressive scale of income taxation, these proposals aren't radical by any means. And Martin's work shows, quite clearly, that roughly 95 percent of the folks in this state won't see their income taxes go up at all.
It's marginal, but necessary.
Contrast that with the ludicrious idea that Sen. Jack Hill wants to make a reality. Hill, as well as other legislative leaders in Atlanta, are mulling over taking funding away from the University System of Georgia and using it to prop up declines in revenue elsewhere. As Hillary noted this morning, it's not unheard of given the fact that education funding has seen its piece of the pie dwindle in years past, thus necessitating an increase in tuition.
Hill's rationale is the colleges and universities across the state can cover any decrease in their funding by simply raising their tuition.
Um, how is this not a tax hike on families and students enrolled in higher education? How is this not simply passing the buck in the midst of a severe budgetary crisis just so you can avoid some tough questions?
Hill's more comfortable raising fees on higher education - thus putting an additional burden on families from all across the income spectrum, as well as straining HOPE even more - then doing something like, say, instituting a small tax increase on the wealthiest families in Georgia.
This is astounding for two reasons. First, it shows that Hill and others who favor this idea have absolutely no concept of the ongoing economic difficulties folks are dealing with right now. Second, his proposal proves the central thesis that folks like Alan Essig from the Georgia Budget and Policy Institute have been pushing for the past few years is true ... the state has a revenue problem, not a spending one.
Hill just wants to address this issue by forcing the state's institutions of higher education to drastically raise their tuition and fees, thus squeezing the pockets of folks across the state even more, rather than targeted and tested tax increases that have a minimal impact on the private sector's purchasing power.
Awesome.
The tuition-raiding seems
Submitted by Polemos on Mon, 02/22/2010 - 8:46pm.The tuition-raiding seems somewhat similar to the Georgia Power rate increase that shifted capital risk-taking from investors to the customers, in that by raiding the tuitions of universities (or, forcing the universities to fund themselves by withdrawing the funding), the students and their families will also have to take out loans—as most students do—to pay for current Georgia legislature budget shortfalls. So, these people will be on the hook directly for paying the interest rates on those loans, and so they incur all of the risk and debt while the legislature, by appearing to have balanced the budget (or made it hurt less), receives the accolades for wise financial planning.
Really good point
Submitted by Martin Matheny on Mon, 02/22/2010 - 9:23pm.I hadn't thought of that, but I can't find any reason to disagree.
You know...
Submitted by Polemos on Tue, 02/23/2010 - 4:36pm.... the more I think about this, the more interesting the case goes. If the revenue shortfall of the General Budget is made up, essentially, by "taxing" (so the ABH editorial argues) the parents and families of students and/or the students themselves, this increases the share of the tax burden to people who are not citizens of Georgia. Out-of-state students already pay a significantly higher tuition for using Georgia's school system, and this kind of move would no doubt increase those rates even more. Why? Precisely in order to avoid the kind of "Won't this hurt Georgia families?" arguments.
I predict that, unless the idea is scrapped immediately and people say they were misunderstood, what we'd have is that kind of justification. The logic is already there in terms of using a national sales tax to fund the federal revenue: "Why have illegal aliens use our services and not pay for them? Make them pay by taxing what they spend while here!" The idea of collecting the revenue from people who don't vote and don't pay taxes (like the rest of us!) but participate in using our services is already there, is the point.
Fees are already collected in addition to taxes. Raising the tuition, and doing so specifically on out-of-staters who use our services but will then "move on somewhere else rather than staying here in our Great State of Georgia," will probably be sold as a fee for using our higher education services.
The pity is that what would really make this kind of argument work persuasively is if those higher education services were well-funded to the point of attracting educational, research, and student talent to those services. But since they aren't well-funded, and this move is a cash-grab from the USG's already emaciated budget, only the cynical version of my prediction remains: they'll promote the attraction to use USG schools as quality of the education *despite* the reduced budget as some kind of efficient use of state resources by the USG, justifying increasing the tuition on the people who will only use the schools and leave with their degrees. And then if people continue to use the schools, this will become proof that the schools really are awesome for the amount they are budgeted, and thus really are attracting people from out-of-state, from whom we as Georgians were always justified in demanding increased fees due to their use of our state resources.
I really, really, hope I'm wrong.