He would replace the lost revenue (only $8 billion) with state aid and more local option sales taxes. The additional state revenue would be raised by expanding the sales tax base to include services and many necessities such as food.We know what would happen in Georgia if Richardson’s plan is successful. Without an independent source of revenue, local governments’ power and authority would be curtailed. And that is a terrible outcome.
citizens than is the state government because they have the ability and flexibility to provide the services those citizens demand. And that requires the ability to raise and lower taxes.
Georgia local governments are more efficient than the state at providing local services because local government officials know the costs and benefits of those services. Relying on political leaders in the state capitals to fund local police, fire and ambulance services and schools almost guarantees that those and other essential local public services will be inadequately funded. Do you think the Georgia General Assembly would fund schools, police or libraries to the extent the average citizen wants or would be willing to pay for? Fifty years of political science research suggests it would not.
That theory is so well-grounded in American political thought that it is incredible that responsible people would suggest otherwise. When your streetlight is out, your potholes are unfilled and no one is answering 911, who will you call? Gov. Sonny Perdue? Richardson? You might as well call the president of France. No fiscal control means no political control.
In the end, local governments would be at the mercy of the legislature. When times are tough, legislatures always cut local aid first. And there is the problem of legislative control over local government spending — all central funding comes with strings attached.
Of course, Richardson is a state political leader. What does he care if his plan undermines local government? Be wary when state politicians offer gifts they won’t have to pay for. But that has been the trend. Politicians have made similar proposals in Florida, South Carolina, Indiana and other states.
Why is Richardson proposing such a monumentally bad idea? He is taking advantage of the unpopularity of the property tax. People hate the property tax because politicians like Richardson keep reminding them to hate it.
Every public finance scholar will tell you the property tax is the best method for funding local government services. But learned opinion has never held much sway with those who demagogue on tax policy.
Don’t get me wrong — there are problems with the property tax. But is the property tax in Georgia the source of much unhappiness? Georgia has modest property tax burdens, at least according to the not-so-liberal Tax Foundation. The state ranks 37th in terms of property taxes as a percentage of income and toward the bottom in all other measurements of property tax burdens. Until the speaker came up with his radical plan, there was very little public outrage over property taxes in Georgia.
Richardson, and other state political leaders, should address the real problems presented by property taxation. If the concern is that property tax burdens are growing faster than income, lawmakers should adopt circuit breakers to protect low- and fixed-income homeowners. If the fear is that Grandma will be forced to move from her lifelong home because of rising property taxes, deferral programs should be adopted to protect her.
But in the end, control over the property tax rests with the people. If the citizens think their property taxes are too high, they should consider what they are getting in return (quality of schools, infrastructure, and so on).
If the citizens still think property taxes are too high, they should demand that the taxes be lowered. If the tax remains too high, the people should vote their local elected officials out of office.