Mr. Rogers said that last year he introduced a resolution that got almost zero recognition, he’s not sure it will get a lot of recognition this year - SR 400. This is a resolution that would require law makers to take every single dollar spent by government, put it on the Internet, and make it searchable. He said he believes that government will never get a grasp on total spending until the people understand what the money is being spent on. He said there are a lot of roadblocks between wanting to do this and actually doing this, but if they could pass this resolution and get it on the ballot, it would require that every single dollar spent, state and local, would be put on the Internet and searchable so that we, as taxpayers, would know exactly what our money is being spent on. He said strangely enough, the effort to do this is coming from the far left and the far right. He said he asked the gentleman from the far right who contacted him why people on the far left want this. The gentleman replied that they believe that if we actually get all this money on line people can see that we’re not spending enough on certain areas, and we can spend more. He said this is a good measure and he hopes that it will get some support this year.
Mr. Rogers said that SR 20 is a resolution he passed last year. He has mentioned it in this Forum before, and he hopes it will get some continued support. It passed through the Senate 44-6. This would limit the growth of the State Budget from year to year, and it would be limited by inflation plus population growth. There are factors for emergencies. Whatever money comes in, beyond inflation plus population, would go into the reserve fund until that fund met 10%, which is what government ought to be doing as a fiscally responsible state. Beyond that the money would have to be returned to the taxpayer before being used to pay off debt. He feels this is the fiscally responsible thing to do. Georgia really has no spending limits. The budget went up by 9% last year. He said that’s wrong. The average Georgian didn’t get a 9% raise, so the government shouldn’t get a 9% raise. The bill passed the Senate with massive bi-partisan support. It is currently sitting in the House. It needs a constitutional majority which is 120 out of 180, our help as taxpayers will be needed on this. He said this bill has been tried on a number of occasions, but never before has it had even a hearing. Mr. Rogers was able to get it out of the Senate, so we are well on the way to make it happen.
SB 16 is Mr. Rogers’ dog fighting bill. He said this is dear to his heart, and he has been working on this for three years. He says Thank God for Michael Vick who has maybe given the resources necessary to make this become law. He said there was a large bust in south Cobb County year or two ago in which they confiscated in the six digits of cash on site. This industry is a large criminal enterprise, and we should put a stop to it. Georgia is one of two states that doesn’t have a penalty for dog fighting. No civilized society should have dog fighting occur.
Mr. Rogers said that last year the Senate passed a bill – SB38 – which would require someone to have a driver’s license in order to buy a car tag. The immediate response was good. A number of car dealers reported that, strangely enough, people were showing up at their dealerships and dropping off vehicles because they didn’t have a license to drive. He said those who profit from this criminal behavior quickly found a way around it. He said he would be meeting with the Secretary of State this week to try to find a way to close the loophole that they figured out. What they are doing now is advertising to people who cannot get a Georgia driver’s license to actually incorporate themselves, and then as a corporation they can get a tag without having to have a driver’s license. It costs about $300-$400 to incorporate, so it does become a little more expensive. He said hopefully, they will have something by the upcoming session to stop this nonsense.
Mr. Rogers addressed what some may be referring to as the GREAT plan. It is Georgia’s attempt at a massive tax overhaul. He said we desperately need a massive tax overhaul, regardless whether we think this is the way to go. When you think about all the different types of taxes and fees and other sorts of nonsense that we pay it adds up to 80 or 90 different ways we are taxed by the state. He said he chairs the Finance Committee, and all they do is tax legislation. He said he thinks most people don’t know how many ways they are getting taxed, and that is why he thinks we need to start focusing efforts on a more efficient flat fair tax system.
Mr. Rogers quoted James Madison who wrote a paper on the issue of property on March 29, 1792. Mr. Madison said …”This term (speaking of property) in its particular application, means that “dominion which one man claims and exercises over the external things of the world, in exclusion of every other individual.” In its larger and juster meaning, it embraces every thing to which a man may attach a value and have a right; and which leaves to every one else that like advantage”.
Mr. Rogers says Madison points out something extremely important here that we hardly ever hear talked about in American politics today when we talk about rights. Madison points out an important truth, and that is, a right cannot exist at the expense of someone else, and rights are individual in nature. We have not a collective right to anything. We do have, as American citizens, individual rights. And we cannot have a right that requires a duty on someone else. Mr. Rogers says when he hears people say they have a right to housing, no you don’t, because that would mean someone would have to give you their house. You have a right to a job, no you don’t. That means someone would have to give you their job. You have a right to buy something, no you don’t, because that means someone has to sell you something. Those are not rights. But a right to property, once you’ve paid for it, is a right, Madison points out.
Mr. Madison goes on…”In the former sense, a man’s land, or merchandise, or money is called his property. In the latter sense, a man has a property in his opinions and the free communication of them. He has a property of peculiar value in his religious opinions, and in the profession and practice dictated by them. He has a property very near to him in the safety and liberty of his person. He has an equal property in the free use of his faculties and free choice of the objects on which to employ them. In a word, as a man is said to have a right to his property, he may be equally said to have a property in his rights. Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions.”
Mr. Rogers said that brings us to the issue of taxation of property. We need to ask ourselves as we go down this road, shall we tax property? Is taxation of property based upon a value, not determined by the true free market, but rather some bureaucrat suggesting what it be worth? Rezoning a tax based not on one’s ability to pay, but again on what a bureaucrat suggests our property may be worth, which may result ultimately in the taking of that property if someone doesn’t have the ability to pay. Would we consider this an excess of power that James Madison wrote about? He said he thinks that’s important.
Again, Mr. Madison…”Where there is an excess of liberty, the effect is the same, tho’ from the opposite cause” In other words, Mr. Rogers said, where an excess of power prevails, we have no liberty. Where we have an excess of liberty we certainly have freedom.
Mr. Madison…”Government is instituted to protect property of every sort, as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own.”
Again, said Mr. Rogers, the government is there to secure for us, not to take from us.
Mr. Madison…”A just security to property is not afforded by that government, under which unequal taxes oppress one species of property and reward another species: where arbitrary taxes invade the domestic sanctuaries of the rich, and excessive taxes grind the faces of the poor; where the keenness and competitions of want are deemed an insufficient spur to labor, and taxes are again applied, buy an unfeeling policy, as another spur; in violation of that sacred property, which Heaven, in decreeing man to earn his bread by the sweat of his brow, kindly reserved to him, in the small repose that could be spared from the supply of his necessities. If the United States mean to obtain or deserve the full praise due to wise and just governments, they will equally respect the rights of property, and the property in rights; they will rival the government that most sacredly guards the former; and by repelling its example in violating the latter, will make themselves a pattern to that and all other governments.”
Mr. Rogers said, now we come to the question that faces Georgia today. That is the lawmakers are going to look at a complete, total change in the way they tax the citizens of this state, or those who happen to travel through our state, or those who happen to be here, but are not citizens. And to construct a just and fair tax system, they must first determine what shall be taxed and what shall not be taxed. Mr. Rogers submitted that it should be universally accepted that a right should not be taxed. Once it has been determined that a right should not be taxed, and that question has been answered, then they move on to step number two. Americans have a right to property. No such right to an income exists, or a right to purchase a television or by any other manner which requires someone else to give or do something for you. A right cannot place a burden on another person. Once this determination is made on what is eligible for taxation, a fair and just tax system should ensure that those transactions which shall be taxed are taxed in a non-discriminatory manner in a transparent system that is as light as possible and equally applied to all. Such a system shall include at its core, and this is very important as they figure out what kind of system do we want, the most efficient collection mechanism possible within the guidelines that have been described. Finally, the tax rates that are applied to this fair flat transparent system should be the function of determining the minimal level of taxation necessary to provide for the constitutional functions of government and no more.
Mr. Rogers said, with regard to a consumption tax, one of the things we need to recognize is that when we tax one business that is purchasing from another business, that tax is rolled into the price of a product that you purchase. When you purchased that product you’ve paid a tax. But you don’t know you paid a tax. You simply purchased a product. He said he believes business to business taxation is wrong because it does not provide a transparent tax system where you do not understand exactly how much you are paying in taxes. He believes government to government taxation is not only wrong, it doesn’t make any sense.
Mr. Rogers laid out some facts regarding our current property tax system. We have 159 counties. Each and every one has a tax commission. Each and every one collects taxes. Each and every one goes out, and on an almost arbitrary basis determines what your property may or may not be worth whenever they get around to actually doing it. The state does require that they do it on a three year period at a minimum, and that is done only for the purpose of making sure the state gets their share which is only a quarter mill. Most politicians want to spend all that money, so they want to be sure they get it. There are 180 school districts which also have the ability to tax you on your property. There are 500 cities to go along with the 180 school districts and the 159 counties. That’s a total of 830 taxing jurisdictions so far. We have an additional 422 various and sundry tax authorities which by law may not have the ability to actually tax you, but can certainly influence the taxes that are collected, such as development authorities. That brings us to a grant total of 1, 261 separate tax entities across Georgia. Now, when we think about collecting taxes for the purposes, let’s admit that for the most part taxes on property and land are collected for the purposes of education. When we think about taxes for those purposes, can anyone truly advocate that 1, 261 different tax authorities across the state of Georgia is an efficient system? Whether or not a proper system, we can argue about that. But is it an efficient system? With a current population of about nine and a half million people, property tax collects about $8.2 billion. About $142 million is from goods. How many billion are being missed from the exemption given to services not being taxed? This shows you what the millage rate has done from 1977 to about the mid-80’s. It was slightly increasing, and since that time it has shot towards the moon. The average annual increase on your property tax in Georgia is 8.3%. You can see the number of years we went well above 8.3%. That increase from 1977 to 1995 was only 6.6%. But, the increase in 2000-2005 is now 8.5%. So you can see the average annual increase on your property tax is picking up steam. Now, is property tax based on your ability to pay those taxes? Surely someone has come to you and said it’s ridiculous that my grandmother is going to get taxed off her property because some developer offered her a lot of money, and she has to sell even though she otherwise would not sell the family farm, but he’s offered a of money, and by the way, she can’t pay her taxes. Personal income rose, 1990-2005, 46.8%. Property taxes rose 176.8%.
The GREAT plan that the legislature is suggesting would eliminate all ad valorem taxes. Mr. Rogers said that when he uses the term property tax, it goes beyond just your house, beyond just your land. That would also include commercial property, the dreaded inventory tax, which is ridiculous, but also automobiles, trucks, boats, planes. In other words, as Madison said, if it is your property, under the GREAT plan Georgia would not tax it. Now, he said, how do we get to that point? Surely we would like to wave a magic wand and say we don’t need $8.2 billion dollars in spending. But, the reality is, under no circumstances can you get a Constitutional Amendment requiring a two-thirds majority vote in both bodies to pass anything like that. The plan that is on the table that has most recently been suggested is a 4% sales tax, which is what the state has right now, to be applied to the final consumption. Final consumption is very important, so we are not taxing business to business, on all goods and services combined. Mr. Rogers said the reality is that as lawmakers go through the political process, he is not sure they can get there. They might have to increase the state sales tax 1%, to 5%, and exempt some of those goods and services, or some of those services. Let’s put this in the proper context of where Georgia is right now. The reality is Georgia already taxes some services, about 30 of the two hundred some odd services that can be taxed. Florida taxes about 70 or 80 services, and they don’t have income tax, but they do have astronomical property taxes, which they are dealing with right now. Tennessee has very low property taxes and no income tax, but they do have a sales tax which is higher than ours, about 7 ½ %, and they tax about 120 of the two hundred and some services you can tax.
So the plan that is being put forth is to expand the sales to include goods and services, alike, and keep it at the same rate. When you buy a product for final consumption use, you will pay a current sales tax on the product, and when you buy a service, such as a haircut, you also will pay a tax on the haircut. Mr. Rogers said a haircut is one of the examples he likes to use, because this is low-hanging fruit. You will hear the argument that the guy who mows my lawn shouldn’t have to collect the tax, because how is the guy mowing the lawn going to collect the tax and remit the tax. A valid argument. Surely we can agree that any business that is already selling a product, collecting sales tax on that product, and remitting those taxes to the state would have no problem including a sales tax on a service they also offer. A haircut is a perfect example. If you just get your hair cut you don’t pay any sales tax. But if you get a hair cut and buy a bottle of shampoo, you will pay sales tax on the shampoo which they will then remit to the state. That collecting ands remitting mechanism is already in place. There are a number of other businesses, such as a car mechanic. At the grocery store you pay tax on a Rotisserie chicken, but not on an uncooked chicken. Grocery stores and all the retail associations are on board with this because it is a massive headache trying to keep up with what is taxed and what is not. It is more efficient to tax everything at the retail level regardless if it is a good or a service.
Mr. Rogers said the lawmakers believe that getting rid of all the current exemptions that exist, which includes groceries, would come up with enough money to offset the property tax and get rid of the property tax. And then the second question comes up. How about local control? This part of the plan has not been very well communicated. Right now many of the school systems in the metro Atlanta area operate on the use of SPLOST dollars for capital construction. Our schools are reliant on sales taxes today. The plan that lawmakers are suggesting would say that our school systems may collect all the taxes that are due using the consumption tax at the rate at which they want to have a consumption tax. They can have a SPLOST on top of what they have right now if they can get the voters to pass it by, some are suggesting a 60% margin, and those votes be held on election day and not on some strange Tuesday. They can use the SPLOST money and the consumption tax money for any purpose necessary, including running the schools. Let’s say the GREAT plan passed tomorrow. Sales tax that would be generated from that immediately passing would mean that SPLOST revenue we are currently generating would double over night. So the school systems, the county government would begin receiving twice what they are currently receiving in SPLOST revenue immediately. Because the tax on services would essentially equal the tax on goods. He said what the lawmakers were suggesting was not that the local school systems could not tax in the manner and at the level they want to tax. They would remove the requirement that the money could only be used for capital expenditures. It would say you can use the sales tax on anything you want to run your schools. All they are simply saying is that taxation of a right of an individual to own property should not occur in the state of Georgia. And any other way you want to collect taxes locally, have at it. This could include a local income tax, which is being done in some states. The message is that you can tax whatever you want as long as it is not a right. You can tax it locally, and you can tax at what level you want to tax, and you can take the money from that taxation and spend it any way you want. The only mechanism that the state will be involved in would be simply collecting the tax through the Department of Revenue which would be necessary for collecting the sales tax, and remitting it back to the place where that tax came from. So Cobb County would get every dollar that Cobb County generated in sales tax. And, one of the things that could be done; right now there is a threshold, if you are a retailer in the state, any time you have income for the month over $10,000 you have to electronically file, they would probably take that down to $1,000, which would get just about every retailer in the state. The importance of that is to know where every single dollar comes from every single retailer, and there will be no confusion as to what county, what city, what locality will be deserving of that tax revenue back.
Mr. Rogers said he comes to a group like this, and he puts out this plan, and he knows he will take some arrows on it which is fine. In general theory, he said, he is advocating that we move away from the property tax because he believes it is fundamentally wrong and in opposition to what we stand for, and lawmakers are throwing out this other plan as far as taxing goods and services as one way they can make that occur. They have not finalized the plan, despite what we read in the media. What you see on the web site - HR 900 doesn’t resemble at all what they are trying to do.