National debt and the FairTax

Moderated by Rick Badie

Republicans and Democrats must rein in a growing national debt, writes Georgia’s junior senator. It’s an issue that’s reached a “tipping point” in need of fixes, he says, proposing the FairTax as an option that he writes would allow the economy to create jobs and thrive. Two companion essays deal with federal fiscal spending in 2016 and tax provisions on timber, a vital economic sector for the state.

Consider the FairTax now

By David Perdue

Georgians sent me to Washington to tackle our fiscal crisis.

Our skyrocketing national debt is more than $18 trillion and there isn’t enough urgency in Washington to rein it in. Our debt has caused a tragic and downright embarrassing phenomenon: My generation is the first in American history to have to tell our kids and grandkids that their generation will be worse off than the previous one.

We have passed the tipping point. As an outsider to the political process, I understand we need to take bold steps now, before our debt and its disastrous consequences become inescapable. One of those bold steps is the FairTax.While many in Washington believe we can tax our way out of this crisis, others believe we can simply cut our way out. Those viewpoints offer a false choice. We must grow our economy in order to get our fiscal situation back on track. And in order to grow, we must enact commonsense policies that allow our economy to create jobs and thrive.

That is why Sen. Jerry Moran of Kansas and I recently introduced the FairTax Act of 2015 in the U.S. Senate, and Rep. Rob Woodall, a fellow Georgian, introduced this bill in the House of Representatives.

While the FairTax has its roots in Georgia, we are building momentum at the grassroots level across the country. But like any bold proposal, Washington insiders have been slow to act.

Together we can continue to grow this movement. The current FairTax proposal now has 74 cosponsors, making it one of the most widely supported fundamental tax reform bills in Congress.

Not only does the FairTax have powerful economic potential but it will also help rein in federal agencies like the IRS, preventing abuse and government overreach.

Under this plan, Americans would be encouraged to save and invest and the amount they would pay to the federal government would be based on what they actually consume.

The FairTax encourages innovation and investment and creates a level playing field with the rest of the world to support continued American growth.

Given my business background, I understand the conditions required for businesses to thrive and compete. Right now, the American tax system is choking growth and preventing businesses from investing, or reinvesting, in America.

As you read this, more than $2 trillion from American companies is sitting on the sidelines overseas. It’s not because these businesses don’t want to invest in America. It’s because our tax system dissuades them from competing here.

The FairTax makes America an attractive place to do business. By eliminating the capital gains and corporate tax, the United States would become a place for global investment and growth.

As President Ronald Reagan said, America was once “a shining city on a hill” for entrepreneurship and innovation. With an inviting tax code, it can be that light once again.

We can’t solve America’s debt crisis overnight, but because of its potential for economic growth, the time for serious consideration of the FairTax is right now.

U.S. Sen. David Perdue (R-Ga.).

Liberate Ga. taxpayers and rein in spending

By Andy Koenig

Tax day may have come and gone, but it isn’t too early for Georgians to start thinking about their 2016 tax burden. I suggest looking at in a different framework. Instead of simply looking at how much you owe, try calculating how long it will take you to earn enough to pay it off.

The answer is depressing. This year, that day happened to fall on April 15, by sheer coincidence. The non-partisan Tax Foundation has dubbed this holiday “Tax Freedom Day.”

But there’s nothing worth celebrating when it comes to Georgia’s and America’s tax burden. This year, it took more than 100 days before the money you earned was truly yours. That’s roughly a third of your income that never made it into your pocket. In fact, you likely spent more on taxes than you will all year on food, clothing, and housing combined.

It could be worse. It could also be much better. Compared to the rest of the country, Georgia was in the middle of the pack. The earliest Tax Freedom Day was in Louisiana, where taxpayers are liberated after April 2nd. Connecticut residents aren’t done working to pay their taxes until May 13th.

But no matter where you live, this day gets later every year. Tax Freedom Day 2015 was three days later than it was last year, and that was three days later than the year before. This trend shows no sign of stopping.

This hurts your local economy. When Tax Freedom Day gets later, it means that you and other hard-working Georgians have less money to spend, save and invest in your own community. Instead, the money goes to politicians in Washington and Atlanta who’ve never missed a chance to spend someone else’s cash.

And their spending addiction is getting worse. Americans are expected to pay a total of $4.85 trillion in taxes in 2015, $350 billion more than last year. About $1.5 trillion is divvied up among local governments and the 50 states. Washington gets the other $3.3 trillion, the most ever collected by the IRS.

Yet it’s still not enough to pay for Washington’s spending bonanza. This year, the federal government is expected to run a nearly $500 billion deficit, 47 percent higher than the deficit a decade ago. This helps explain why the national debt has more than doubled from nearly $8 trillion to over $18 trillion in the past 10 years.

That’s money that you and I are going to have to pay back. In fact, if we were paying enough to take care of the entire national debt, every American would have to forego his or her income for more than a year.

Which leads us to the most depressing fact of all. Most politicians want to add even more to this mounting pile of debt.

In the coming weeks and months, Georgia’s representatives in Congress will debate federal spending for fiscal year 2016. At stake are the modest budget levels that bipartisan majorities passed in 2011. Four years ago, both parties agreed to pass the Budget Control Act, which raised the debt limit in exchange for modest spending limits.

But that bipartisan agreement may soon disappear. Representatives on both sides of the aisle claim the Budget Control Act will lead to “drastic cuts,” even though Washington will already spend more in 2015 than last year.

It’s up to you to stop them from breaking their promises. Georgians need to keep their representatives from blowing past those budget limits. Washington is already spending and wasting too much of your hard-earned money. Georgia can’t afford for Tax Freedom Day to get any later than it already is.

Andy Koenig is senior policy adviser at Freedom Partners Chamber of Commerce.

Timber tax hurt growth

By Steve McWilliams

It is easy to take forests in Georgia for granted. They are often viewed as natural gifts akin to the sun and the clouds- timeless and steadfast. But Georgia’s forests have not been here forever and they don’t take care of themselves. The state’s working forests, which provide so many benefits to Georgians, face a public policy threat.

The majority of Georgia’s forests, 91 percent, are privately owned. Forest landownersinvest their resources to manage healthy forestlands that benefit every Georgian. Their forests provide air to breathe, water to drink, beauty and recreation to enjoy, along with billions of dollars in economic impact to Georgia. These are Georgia’s working forests.

Working forests are planted, harvested and replanted to produce the raw materials for products we use every day, and, increasingly, as a source of energy. These renewable resources on 23 million acres of privately owned working forestland are part of the state’s second largest industry in terms of wages and salaries. The forestry sector supports 133,000 jobs and provides an annual $28.9 billion boost to the state’s economy.In local terms, working forests are vitally important to Atlanta and the metro region. According to the Georgia Institute of Technology, forest landowners and forestry-related industries provide $3.8 billion in total economic output, $861 million in wages and salaries and 13,880 jobs to the 10 counties that comprise the Atlanta Regional Commission.

The impact of our state’s working forests extends well beyond the economy to the environment. A 2011 University of Georgia study estimated the value of these services — in the form of clean water, clean air, wildlife habitat and scenic beauty — at $37.6 billion annually.

We enjoy these benefits thanks to a fair and reasonable federal tax policy that recognizes the long-term investments and responsible land management of forest land owners. Current tax provisions, among other things, allow landowners to deduct the annual costs associated with growing healthy, sustainable timberlands.

According to research by F&W Forestry Services that analyzed the impacts on a typical Georgia forest land owner, removing these provisions would reduce returns and cash flows by almost one-third. Most timberland owners, especially smaller ones, need cash flow to justify their long-term investment in their property. Without existing provisions, many timberland owners would potentially be forced to convert their land to other uses.

A proposed tax reform package released last year — the Tax Reform Act of 2014 — is still being discussed as a blueprint as Congress evaluates ways to reform the nation’s tax code. Even though several delegates have spoken publicly against the proposal, it is alarming that a tax policy that helps the environment and economy could end up on a congressional chopping block. We stand to lose the many public benefits that privately owned forests provide.

A healthy and vital forestry economy is essential to Georgia. We should expect federal policy to support an industry that helps our economy and ecosystem. The current timber tax provisions are a great example of how Washington can help, not hinder, growth and prosperity.

Steve McWilliams is president and CEO of the Georgia Forestry Association.

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