Friday, September 01, 2006

Perdue-Cagle: In it for themselves, maybe also Georgia.

Serendipity, I tell you:

The evidence is conclusive: In 2005, Georgia legislators quietly smuggled language into an otherwise routine tax bill that gave one particular Georgia taxpayer a special tax deferral worth more than $100,000.

The taxpayer in question was Gov. Sonny Perdue, the man who signed the bill into law on April 12, 2005, and shortly thereafter signed his state tax return taking advantage of that special legislation. . . .

Because Perdue invested that $2 million in property out of state rather than here in Georgia, he still faced payment of Georgia capital gains tax of more than $100,000. Under state law, Perdue could have deferred paying that tax only by investing the money in property here in Georgia.

A few months after Perdue bought his Florida land, though, the state Department of Revenue asked the Legislature to drop the in-state property requirement on capital gains, effective Jan. 1, 2005. According to Revenue Commissioner Bart Graham, the department made that request on its own because it feared that the existing provision might be unconstitutional. As Graham points out, Georgia was the only state in the country that still required taxpayers to purchase land in-state to qualify for a tax deferment.

The department's request was then included in House Bill 488, along with scores of other mundane changes to state tax law also sought by the department. Such bills are an annual exercise in the Legislature, and are almost never controversial. In this case, HB 488 passed the House unanimously and was sent to the Senate, where it was approved by the Senate Finance Committee and sent to the Senate floor for action.

Then things got interesting.

On March 22, HB 488 was mysteriously recommitted to the Finance Committee, then chaired by Sen. Casey Cagle (R-Gainesville). Back in committee, only one seemingly minor change was made to the bill — changes affecting capital gains taxes from the sale of property were suddenly made retroactive all the way back to Jan. 1, 2004, more than a year earlier. Although only a few knew it at the time, that minor change meant big money for Perdue, whose land transactions now fell under the new law.

Cagle, who has since become the Republican candidate for lieutenant governor, said in an interview Tuesday that the Department of Revenue had requested the change making those provisions retroactive.

However, that is contradicted by Graham, who says his department made no such request.

"I was just informed that the bill was going to change," Graham told me, stressing that he neither opposed nor requested the change.

In the end, the only provisions of the 24-page, 27-section bill retroactive to Jan. 1, 2004, were the two provisions needed to let Perdue defer more than $100,000 in state taxes.