At the moment, the speaker of the House's tax plan is broken into two pieces of legislation, both marked "DRAFT" in tall capital letters, so the wording is nearly certain to change. One resolution will move through the House, the other through the Senate.
HOUSE The House portion of the legislation sets out several proposals, all of which voters would have to approve in a statewide referendum to alter the state Constitution and change the tax laws:
– It would increase the annual homestead exemption on school taxes so homeowners wouldn't pay any property taxes toward their public school system. This exemption, which could only be taken on a person's primary home, would cut out only a portion of a person's property taxes. This would not affect commercial property, which would still be taxed as it is now.
– It would cut out the annual property tax on automobiles as long as those vehicles are "used solely for personal use."
– It would require the General Assembly to set aside state money to replace this revenue. That means the state would cut checks to reimburse each school system for the money it loses from the increased homestead exemption, as well as what school systems, city governments and county commissions lose from the vehicle tax.
– It is not included in this particular legislation, but Richardson's intent is to replace this revenue through a new sales tax. The details have shifted several times, but the idea is to repeal various sales-tax exemptions on groceries and lottery tickets. Initially, many more of the more than 100 exemptions on the books were to be repealed, but that plan has been scaled back.
– It's not included in the current legislation, but part of the plan is a new tax on many services. For example: Georgians would pay a 4 percent sales tax when they go to an accountant or lawyer, but medical services, private schooling and child-care services would not be taxed. Likewise, business-to-business services would not be taxed. In the past, the speaker has said this tax would amount to 7 percent in most counties, but in the current version that has decreased to 4 percent, meaning local governments wouldn't be able to charge their extra pennies (known as local option sales taxes) on services. In fact, local option sales taxes "will not change at all," a spokeswoman for the speaker said.
– The legislation would allow, but doesn't require, the General Assembly to enact a state income tax credit for low-income families to make up for the new sales taxes they would pay on groceries. The speaker has said he intends to enact some form of this tax credit through separate legislation, as opposed to writing it into a constitutional change.
– It would allow the General Assembly to abolish most property taxes used to pay for education, getting rid of them completely instead of just on a person's primary home, should the GREAT Plan produce enough new revenue. The only exceptions are property taxes dedicated to retiring existing debt, intangible taxes and property taxes generated in tax allocation or community improvement districts.
SENATE The Senate portion of the legislation deals with capping the amount of tax revenue that local governments can take in. Likewise, it would call for an authorizing a state referendum.
Specifically it would:
– Essentially freeze the assessed values of people's primary homes at their 2007 levels as long as the current owner owns the house, although new additions or improvements to a home can still increase its value. There is also an allowance for annual assessment increases of 1 percent or less. This is an attempt to curb so-called "back-door" tax increases, in which local tax assessors increase their estimate of a home's value, thus increasing the amount of taxes a property owner owes without local elected bodies having to increase millage rates. The caps would not affect commercial property.
– Cap the total amount of annual property tax revenue that any local government can take in. This section would allow a county, city or school board to take in only what it took in the year before in property taxes, plus an increase that would be based on population increases and inflation. Part of the intent here is to keep local governments from jacking up property taxes on businesses, since they'll be forbidden from doing it to homeowners. The cap would not limit the amount of other revenues, such as sales taxes or franchise fees, that governments can take in.