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1 Justin Higginbottom, Georgia Should Respond to Recession with Tax Reform, Not Tax Gimmicks 1 (2010)

handle is hein.taxfoundation/ffcbcxz0001 and id is 1 raw text is: FOUNDATION February 19, 2010 No. 212 FISCAL FACT Georgia Should Respond to Recession with Tax Reform, Not Tax Gimmicks By Justin Higginbottom Introduction Georgia recently has come off a large drop in tax revenue that required Governor Purdue to cut some public spending. While tax revenue is expected to stabilize soon, federal stimulus money will run out in 2012, so champions of higher taxes and state spending are pointing with alarm at the long-range projected budget gap of over $2 billion. Tax hike proposals are proliferating, with the intention of either preventing more spending cuts or making possible new spending increases. Two of the most frequently mentioned so far are a cigarette tax hike (from $.37 to $1.37) and a hospital tax.1 But targeted tax hikes and increasing the size of Georgia's troubled Medicaid system is not the path to sound tax policy and stable revenue. Recessions can stimulate needed tax changes. Georgia should take this opportunity to get smarter with its tax policy, doing everything possible to soften a future recession's blow and increase reliable revenue now. This report summarizes Georgia's tax climate and proposes reform for this end. Overview of Georgia's Tax Climate The Tax Foundation's 2010 State Business Tax Climate Index, a measure of how conducive a state's tax system is to non-distorted economic growth, ranked Georgia 29 out of 50, where 1 is the best tax system (see Table 1). This places Georgia's tax system close to the middle nationally, though Georgia has a lower ranking than four of its five neighboring states.2 1 Higginbottom, Justin, Tax Foundation Fiscal Fact, No. 203 State Hospital and Medical Provider Taxes: Not What the Doctor Should Order.. 2 Alabama: 19; Florida: 5; North Carolina: 39; South Carolina: 26; Tennessee: 22. Padgitt, Kail, Tax Foundation Background Paper, No. 59, 2010 State Business Tax Climate Index. Justin Higginbottom is an analyst at the Tax Foundation.

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