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Wednesday, March 30, 2011 - 5:56am

Vote on Tax Reform Plan Stalled

State lawmakers were unable to come to an agreement Wednesday on a tax reform plan.

Republicans have proposed a plan that would reduce the state income tax from 6 percent to 4.5 percent. It would add taxes on auto repair, car sales between individuals and some telecommunication services.

State Democrats say the plan would cut taxes for people with lower incomes, and the wealthy, but not the people in between.

House Minority Leader, Democrat Stacey Abrams, says the plan would add hundreds of dollars in state taxes for people earning between $100,000 and $180,000.

And Senate President Pro Tempore Tommie Williams of Lyons agrees. He said he and other Senators spent much of Wednesday trying to obtain new tax estimates from Georgia State University.

“As Rep. Abrams pointed out, there was a gap of people in there that were going to have tax increases, and we’re not about putting tax increases on middle incomes," Williams said late Wednesday. "So we’re making some changes so that that bracket of people would not be incurring tax increases.”

The General Assembly could take up the plan next session. But Speaker of the House David Ralston, a Republican, said Georgia residents want tax reform now.

“I think it’s just extremely important that we make this a priority this session. And that’s why we’ve had some gaps in the schedule today,” Ralston said, in reference to committee meetings that were cancelled in anticipation of a vote.

He said he's eager to come to an agreement with the Senate, but the Senate has insisted that it cannot accept a tax increase on the middle income-earners.

The bill passed a joint legislative committee Tuesday and was meant to come to a floor vote Wednesday.

House majority leader, Republican Larry O’Neal, says the plan would make Georgia competitive with other states.

“We’re trying to make it so that no one has to pay more taxes," he said in an interview. "We want most people to pay less. But we’re sending a message nationally and internationally that our tax rate is 4.5 percent. The psychological advantage of that is tremendous in the economic development arena.”

Florida and Tennessee have no state income tax.

Detractors say it won’t solve the long-term deficit and will not let the state avoid future cuts in education and healthcare. Allan Essig of the Georgia Budget and Policy Institute said the new tax code was meant to address the state's deficit.

But legislators have largely rejected the suggestions of a tax reform council that state Republicans formed last year. Notably, they scrapped an idea to reinstate a grocery sales tax.


The Associated Press