Replacing the state income tax with a sales tax sounds good and it is if you are wealthy and not a senior citizen. If you have a budget and income that allows you to invest or save a significant amount of your income, you will benefit from the proposed change. If not, for the vast majority it will mean you will pay more state taxes.
In my case I would pay more per month than I currently do per year. I am a retired 63 year old and my situation will be typical for retired seniors.
Want to know what it will do for, or should I say to, you? It is very easy. Just look at your current Georgia State Income Tax form and see what the total taxes owed for 2012 were. Under the proposed legislation sales tax would increase somewhere between 3 and 5 percent, though some estimates are that it would actually be greater than 5 percent. We will take the median, 4 percent, and divide the State Income taxes paid for 2012, and the result is the amount of goods and services you could buy per year before you started paying more taxes under the proposed plan.
Example: State Income Tax Paid $350/.04 = $8,750 in annual Goods and Services.
When calculating your annual purchases, be sure to remember gas and utility bills, and don’t forget that Georgia just closed the mail order /Internet sales loophole.
I fear that the “No State Income Tax” mantra will sound so good to the vast majority who will never do the math to see how it will affect them. For those on a tight budget the 3 to 5 percent increase cost of all goods and services to include rent may push them over the financial brink.