Question

Select a past tax increase or bond issue in Georgia and describe it. What was it for? Who benefited? How successful was it? What went right or wrong? How would you have handled it?

Answer 1

Reduction in corporate tax rates was coupled with small trims in income tax rates in the state of Georgia in 2017. In lieu of this, the legislation eliminated the tax-free status of private activity bonds. These are issued by the state, and, local Governments to reduce the cost of infrastructure projects when this infrastructure will be heavily used by the public.

Such bonds have been used for financing, and, expansion of private schools, Children's healthcare school of Atlanta, Hartsfield Jackson International Airport, low-income housing units. The bonds have assisted in financing the state's critical infrastructure, and, public facilities.

Non-profits can get better projects; allowing to save money on projects for helping the local money. The University System in Georgia has used more than $3 million in dorms, dining halls, parking decks, and, other facilities. The Georgia transportation department uses it to finance interstate projects.

As the President calls for an increase in infrastructure spending, this would make selling these bonds to finance infrastructure difficult. Children's Healthcare of Atlanta issued bonds worth $57 million for financing the acquisition of 30000 square feet of land in Fulton County. The House tax bill passed says that the Federal Government should not subsidize private investments. In a decade, this would save $39 billion for the Federal Government but it would undermine public-private investments in infrastructure projects. It eliminates the advantage in refinancing old bonds.

Other options need to be looked at to finance corporate and income tax cuts. The tax-free status is important; other bonds can be introduced with low tax rates.