Taxes collected in Georgia support a myriad of programs and objectives agreed upon at the polls by state residents. When a governor wants to offer tax incentives to certain entities, he has to pull the funds from somewhere besides his magician’s hat. He either increases revenue or he robs from Peter (one program) to pay Paul (another program).
Roy Barnes taking from one program to give to another
Roy Barnes wants to provide a two-year financial incentive to businesses in Georgia by waiving the state portion of any payroll tax the company incurs for any new hires.
That sounds swell, except Roy isn’t proposing a new way to increase revenues to offset that loss of potential income. If the goal is to increase Georgia jobs–and the monies in the state coffer to handle the financial obligations related to oversight of these new jobs–we need new jobs and the payroll tax revenue streams they would provide.
But Roy wants to tell prospective employers that they don’t have to pay those payroll taxes for two years. That means he has to come up with someone else to pay it for them.
Barnes proposes to increase the taxes on hospitals, schools, churches and all not-for-profit organizations in the state to make up for the shortfall.
Roy plans (notice I didn’t say he would put it to the citizens to decide) to end the Georgia Sales Tax Exemption benefit so he can start raking in the extra tax money your hospital, your school and your church will have to pay for their supplies. Roy thinks that money should go to for-profit businesses instead.
Tax incentive for two years, employer not required to continue employment
Employers aren’t going to promise to keep those employees on, necessarily, after those two years of tax freebies are up. That means that if their business would be more lucrative to cut those jobs after the tax incentive is over, the state of Georgia will still be responsible to provide unemployment benefits and other services to these newly unemployed.
That will just increase Georgia’s workforce burdens without solving our job creation situation permanently, so sometimes solutions really aren’t solutions, after all.
In fact, what would happen is that those hospitals, schools and churches would have to pick up the financial burden of caring for these unemployed, instead of the business who originally hired them.
Indigent hospital costs would rise (but the hospital wouldn’t be getting that 501 tax break to help with it) and churches would be helping to meet the needs of those unemployed in their midst without the tax break, too. And the same would happen with the Salvation Army and other not-for-profits that will suffer if Roy becomes governor and implements this plan.
Roy Barnes wants to cut capital gains tax for businesses: That tax is already cut!
Roy Barnes also wants to cut the capital gains tax of six percent for any business willing to reinvest their profit that year by buying more land in Georgia for expansion purposes, or to create a new business altogether.
Georgia businesses already enjoy a tax break if they reinvest profits into their businesses in this way. It is known as the Georgia Sales Tax Exemption. Doesn’t Roy know that? Businesses that purchase new machinery or land do not pay the sales tax on it. Additionally, certain items purchased by manufacturing facilities also enjoy this tax discount.
Roy Barnes’ job program plans this go ’round don’t seem to make any more sense than his plans did in 1999 through 2003.
Source: “Roy Barnes unveils jobs program this week, talks jobs at Brunswick church,” AJC.com