For a long time, states whose economies heavily depend on tourism and retirement have chosen to adopt tax systems that rely on sales rather than income levies. The reason is pretty obvious: Tourists from other states subsidize services by paying relatively high sales taxes, while retirees and younger people seeking lower living costs prefer to live in places where they don’t have to pay any or much in the way of non-federal income taxes. In addition, states with mineral wealth, such as Alaska, Texas, and Wyoming, often feel no need to tax incomes.
But to a growing extent, states without these special characteristics are moving in the direction of income-tax abolition for what can only be described as ideological reasons. Republican-dominated Tennessee, for example, isn’t one of the top tourism states. But lawmakers there are convinced they can make Tennessee a tourism mecca by abandoning income taxes, which the state did this year. Regressive sales and property taxes are taking up the slack. And now in Georgia, which borders both Tennessee and Florida, Republicans are beginning to stampede in that direction, as the Atlanta Journal-Constitution reports:
Last month it was Georgia Senate President Pro Tem Butch Miller, a candidate for lieutenant governor in 2022, trying to play to his Republican base by vowing to eliminate the state income tax.
“Taxation is theft. Pure and simple,” Miller declared in his press release announcing proposed legislation.
This week it was former U.S. Sen. David Perdue, who is challenging Gov. Brian Kemp in the Republican primary next year, promising as he entered the race this week to end the state income tax – which brings in more than half of all revenue for k-12 schools, colleges, public health, criminal investigations, prisons, and mental health programs.
It’s probably not coincidental that both Miller and Perdue have been endorsed by former president Donald Trump, who never hesitates to propose fiscally irresponsible policies that please donors and MAGA folk generally.
The trouble with income-tax-abolition schemes is that even if every Republican pol doesn’t embrace them, they will be under considerable pressure to cut taxes significantly to compete. Perdue’s rival, the incumbent Georgia Governor Brian Kemp, has not so far come out for abolishing the income tax, but he’s already pushed through an income-tax cut and may well come back for more. In most Republican circles, the discredited supply-side-economics notion that tax cuts pay for themselves in greater business activity and higher revenues is still de rigueur. Democrats in Georgia and elsewhere will point to the supply-side experiment conducted by Sam Brownback in Kansas in 2012 and 2013, which destroyed the state budget and starved education funding.
But Republicans who must compete in primaries, like Perdue and Kemp, may not think long about consequences, fiscal or political. And the superficial draw of middle- and upper-class migrants income-tax abolition might produce will be even harder to resist. With pols like Butch Miller intoning that “taxation is theft,” anti-tax demagoguery may soon go wild.
