What Are We Missing in Georgia?

What Are We Missing in Georgia?

According to the Atlanta Journal-Constitution:

Rep. Chuck Martin (R-Alpharetta) is pushing legislation co-sponsored by leaders of both parties to make sure Georgians don't have to pay state income taxes on the stimulus checks they might be receiving from the federal government.

The final stimulus plan hasn't been approved by Congress, but President Bush and congressional leaders have supported putting $150 billion into the package. Under the plan, most individuals would get up to $600, couples would get $1,200 and each dependent child would bring families an extra $300.[...]

Without his bill, Martin said recipients would have to pay the 6 percent state income tax on those stimulus checks.

We're not so sure about that. Some states allow residents to deduct federal taxes from their state taxes, so reducing federal taxes would increase state taxes. That's why Missouri enacted a bill similar to Georgia's back in 2001. But Georgia does not allow federal deductibility like Missouri does, so that's not the reason.

We've read the text of the bill (which just adds a one-year income exclusion, without changing any other laws) and the relevant statute, and we can't figure this out. When filing taxes, Georgia instructs filers to start with federal adjusted gross income and then subtract state deductions. The stimulus rebate check, as an advance on the 2008 tax refund, would not increase or decrease federal adjusted gross income, so why would it affect state taxes?

It may well be that Georgia legislators want to give taxpayers a one-year cut in their income tax. But if they're doing that, they might want to get rid of the bottom five income tax rates which apply to income earned under $7,000.

State of the Union Address Mostly on Target, but Misses One Important Point

In tonight's State of the Union Address, President Bush proposed the right prescription of short-term stimulus to calm American's economic jitters in the near term and long-term confidence-building by challenging Congress to make his signature tax cuts permanent.

But the President missed a golden opportunity to use his bully pulpit to jump-start the debate over the nation's lagging business tax competitiveness in the global economy. With the second highest corporate tax rate among developed counties, the U.S. business tax system continues to fall behind as Washington stands still, thus threatening American jobs and undermining the attractiveness of the U.S. as a place to invest.

Click here for more on corporate taxes.

The 1870s Called: It Wants Overreaching Virginia Legislature Back

In a rush to relieve Virginia motorists of steep "abusive driver fees," state legislators have run head-on into a 130-year-old Virginia State Supreme Court case that is thwarting their attempts. The controversial law passed last year requires drivers charged with abusive driving to pay heightened charges (taxes) to the state. They are currently charged in three installments over the space of three years and range from $750 to $3,050.

The repeal of the highly unpopular law appears to be a virtual certainty but the Washington Post reports that refunding money paid by those already assessed is being held up by Ratcliffe v. Anderson (Va. 1878), which states that the legislature "oversteps its authority when it passes legislation to invalidate or otherwise reopen a court judgment or decrees." The court's decision effectively prevents any retroactive action by the legislature in stopping the collection of the tax already owed.

One possibility being discussed is to grant refunds of the tax paid only after complete payment. This would require taxpayers to pay the repealed tax, and then receive it as a refund. That is at least in harmony with the Court's decisions. But a refund troubles some lawmakers who oppose writing checks to drunk drivers convicted of killing someone during the last year.

Although the long-standing case throws a wrench into the well-designed plans of the lawmakers, it appears that an all-out effort will be employed to side-step the case law and repeal last year's bad legislation that became worse law:

The House also wrestled Monday over what to do about those who are already paying the fees. House Democrats pushed for an amendment that would allow them not to pay. But the Republican majority, citing many of the same concerns that came up in the Senate, rejected the idea.

Our recent wrap-up of their likely repeal is here.