2012 GEORGIA TRANSPORTATION REFERENDUM SUMMARY  

On July 31, 2012, Georgia voters will go to the polls to decide on transportation projects, on a county by county basis, to approve a 1 cent sales tax for ten years, to fund badly needed roads, rails, transit, port and aviation projects. This economic investment will provide approximately 194,000 jobs to Georgia over the next ten years.

Why do we need this tax?

• Jobs! Jobs! Jobs!
• Improved transportation provides economic investment in our state for now and into the future.
• Improve our quality of life by reducing congestion time, allowing more time with our families and improving traffic safety.

Why support this now during an economic downturn?

• Georgia ranks number 49 of 50 states in transportation investment.
• Metro Atlanta has the top ten congested roadways in Georgia.
• In 2011, Atlanta had the 11th worst record for traffic delays in the nation with 58 hours lost annually.
• Out of 400 metro regions in the US, Atlanta is number 400 in job growth, losing 30,200 jobs since August 2010, now back at 2002 employment levels.
• In metro areas nationwide, 40-60% of architects are unemployed.

Can we trust the government to provide what the voters approve?

• If a region approves the tax, all monies stay in the region.
• Only the projects approved will receive tax dollars.
• The tax will end in ten years or earlier as soon as projected revenues are collected.

How will the Referendum impact architects?

• Jobs! Jobs! Jobs! Rail stations, airport improvements, parking lots and garages, port improvements, bike trails, renovations and planning studies are all on the list.
• Expanded economic development around each of the expanded transportation projects.
• Improved quality of life with more safety, personal time and access.

What can architects do?

• Let our legislators, mayor and county commissioners know that we support the Transportation Referendum.
• Partner with sister organizations to leverage success.
• Let architects and other voters know that they all need to vote in support of the Transportation Referendum.

PROPOSED LEGISLATION TO TAX PROFESSIONAL SERVICES

AIA Position

The AIA believes taxing architectural services would significantly hurt the design industry by encouraging clients to turn to unlicensed designers or out-of state firms for services, seriously eroding protection of the public’s health and safety. Taxing architectural services would put the architectural profession at a competitive disadvantage with out-of-state firms not paying the tax and would hurt small businesses most. The AIA believes taxing architectural services would have an adverse impact on the state’s revenue, economy, and public health, safety and welfare. 

Action Sought

AIA Georgia urges the state legislature to craft tax legislation that supports the state’s economic development objectives through revenue programs that are fair to all businesses.

Explanation and Justification

On the surface, “broadening” the tax base to include professional services seems a simple option for states. But taxing professional services – especially architectural services – makes poor economic sense. Taxing design services would significantly harm the design industry by slashing profit margins, and decreasing the overall amount and quality of design projects. A service tax would place a disproportionate burden on smaller firms because they cannot provide the same services large firms provide internally (e.g., legal, advertising, and accounting services), thereby increasing smaller firms’ costs. Small in-state firms confined by the tax lose a competitive advantage to out-of-state firms that are not subject to the tax or multistate firms, which can farm projects to an out-of-state office.

Taxing architectural services would cut into already low profit margins of architectural firms, forcing many firms out of business. This conflicts with the goal of state laws that require licensing of design professionals to protect the health, welfare, and safety of the public. The tax may further adversely affect the quality of the built environment by encouraging reuse of old plans to cut costs, thereby reducing new and innovative building design. Taxing professional services would have an adverse impact on the state’s revenue, economy, and public welfare and health. Taxing design services would erode the tax base by not only driving out architectural firms, but also keeping businesses from relocating to the state and expanding within the state. The predicted increased state revenue raised by the tax would be offset by the cost of government enforcement. 

Key Points- Professional Service Taxes…

•  Have historically failed to generate the amount of expected state revenue.
• Place in-state firms at a competitive disadvantage since out-of-state firms are not taxed
• Drive in-state firms to seek out-of-state projects.
• Place a disproportionate burden on small firms, the majority of the architectural profession.
• Require a new level of bureaucracy by state government to implement and enforce these taxes.
• Are difficult to administer often leading to double and triple taxation for a project.
• Hurt profitability of firms, collecting these taxes prior to receiving payment from the client.

States that Tax Architectural Services:

Delaware, Hawaii, New Mexico, South Dakota, Washington