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Hall state lawmaker Emory Dunahoo continues push for FairTax
Emory Dunahoo
State Rep. Emory Dunahoo, R-Gillsville

A Hall County state lawmaker has introduced “FairTax” legislation that would convert Georgia’s tax code from a state income tax to a statewide consumption tax system.

By introducing House Bill 543 this week, Rep. Emory Dunahoo, R-Gillsville, said he’s hoping to build on momentum from previous efforts for a Georgia FairTax Act by explaining the “fairness” of a consumption-based tax system to the general public. He introduced a similar bill in the 2015-16 legislative session.

“We’re building a foundation talking to people all across the state of Georgia of how this would work,” Dunahoo told The Times on Wednesday. “Of the many people we have talked with, 90 percent liked it. They said it’s a no-brainer.”

Dunahoo said the FairTax does away with the 6 percent income tax rate, and 4 percent sales tax, and replaces it “with a broad-based consumption tax.” According to the bill, the person “using or consuming” a taxable property or service would be taxed at a rate of 6.7 percent.

“We’re putting more money into consumers’ pocket,” Dunahoo said.

Two hours after filing the 42-page bill, Dunahoo said 55 House colleagues signed on, including four Democrats. He said his fellow Hall County House members also are on board.

“This is a non-partisan bill,” Dunahoo said.

A feature of the proposed FairTax Act is a “prebate,” which according to Dunahoo would reimburse taxes paid on taxable items up to a certain amount and thereby help families near or below poverty level.

Dunahoo is one of a handful of House members who have signed a FairTax pledge from the nonprofit grassroots organization Georgians for Fair Taxation.

GFFT’s stated mission is to promote and enact a national and state FairTax to “completely replace income tax, payroll taxes, gift and estate taxes and corporate taxes.”

By implementing a FairTax, GFFT claims it will stimulate the economy and create jobs, increase take-home pay for all workers, restore taxpayers’ financial privacy and still provide the same revenue to the government to fund spending priorities.

John Linder, a member of the U.S. House of Representatives from 1993 to 2011, is often called the “Father of the FairTax.” Linder spent most of his 35 years in politics, beginning in the Georgia House, promoting the FairTax, In 2005, Linder teamed up with syndicated radio talk show host Neal Boortz to write the “FairTax Book.”

During the 2008 Republican presidential primary campaign, former Arkansas Gov. Mike Huckabee rose in popularity as a GOP presidential candidate in large part by supporting the FairTax ideas championed by Linder and Boortz.

The tea party movement that caught fire in 2010 also rallied around the FairTax provision of a “single-rate tax system.”

In 2013, when a Georgia Senate Committee looked at whether implementing FairTax would benefit taxpayers, it concluded that the state’s top rate of 6 percent on income “could be lowered and potentially eliminated over time.”

The Senate Committee recommended that the legislature should annually continue reforming Georgia’s “archaic” tax structure.

Georgia lawmakers are currently considering legislation, House Bill 329, that would replace the income tax rate that tops off at 6 percent with a flat tax of 5.4 percent for all Georgians. The flat tax is not the same as the broad-based consumption tax proposed by Dunahoo in his legislation.

The Georgia Budget and Policy Institute instead suggests lowering the top income tax rate to 5.75 percent while keeping a graduated rate based on income.

According to the Institute’s recommendation, revising the bill to keep Georgia’s longstanding graduated structure in place and dropping the top rate to 5.75 percent cuts taxes for all people at poverty-level incomes.

GBPI said that reducing the top tax rate, along with other provisions in HB 329 that would include a new Earned Income Tax Credit, would provide a larger tax cut to middle class families.

“Flattening Georgia’s income tax rate to 5.4 percent can cause future headaches to budget writers as lost revenue mounts,” the GBPI said in its analysis.

Len Burman, Institute Fellow at the Urban Institute and co-founder of the Tax Policy Center of the Urban Institute and Brookings Institution, criticized the FairTax as “regressive” in a 2015 report.

“The problem is that very high-income households spend only a fraction of their income, while low- and middle-income people spend all or most of what they make,” Burman said. “A sales tax, by design, exempts a large share of income at the top. If it includes a prebate to protect people at the bottom and doesn’t add to the deficit, then it must raise taxes on people in the middle.”

Dunahoo said that Georgia ranks 36th among the nation’s 50 states on the business tax climate index. He points out that Wyoming, Florida, Alaska, Nevada, South Dakota and Washington, which have no state income tax, rank near the top among states friendly to business.

“We want to do what they’re doing, but get rid of all exceptions,” Dunahoo said.