There is no question that transportation funding sources are declining and Georgia’s roads and bridges are expensive to maintain; not to mention that a comprehensive solution is needed to expand our interstates and improve major roads statewide to support our growing population. Now may be the time to boldly advance a comprehensive strategy that not only addresses transportation funding but also directly enhances economic development and job creation opportunities for all Georgians.
While we consider transportation funding lets remember how we create jobs. When out of state companies consider relocating their headquarters their leaders evaluate the available skilled workforce and the target state’s education system. They also examine the region’s transportation network, however, the business environment and combined state and local tax burden are perhaps the determining factors. Our own Georgia based companies, especially the smaller businesses that employ most Georgians, are particularly affected by state personal income taxes because small business income is passed to the owners and is paid individually. When people have more money to save, invest and spend they do so. When business owners have more money and earnings increase many companies hire more people and grow their companies. Although Georgia has a low tax burden compared to many states, our state income tax rate is near the highest in the southeast United States. Numerous states have lowered their tax rates the past two years and maintained or even improved their state credit ratings. Let’s not miss this opportunity to focus on job creation, become even more competitive, and dedicate additional moneys to improve our infrastructure.
As we address transportation funding and consider dedicating new revenue sources for transportation projects, we should boldly consider lowering our state income tax rate to 5 percent or less to ignite economic development across our state. We can do so without raising the current state 4 percent sales tax rate.
Furthermore, while we phase in the lower income tax rate, we transition to a broader consumption sales system similar to other states that have little or no state income taxes. This can be accomplished while eliminating business input taxes and keeping food, medicines and professional services exempt. Such a measure would maintain current state revenues, provide a dedicated transportation funding source, more fairly tax consumption rather than income and also incentivize state job creation and attract more corporate relocations.
So while we rededicate funds for transportation projects, lets stay focused on job creation measures.