Revenue Options for Georgia
There is no reason why Georgia should rank in the bottom tier of states on many measures of quality of life. Georgia’s per capital income ranks us in about the middle of the U.S., but Georgia is one of the lowest tax states in the nation. If we cannot meet the basic needs of Georgians during an economic recovery maybe it is time to look for ways to increase revenues. We need funds to address essential needs, and we want to avoid future cutbacks when the economy slides again.
We need to be able to see what we are doing.
One thing Georgia should do immediately is to create a “tax expenditure budget” that allows the public to see the value of tax changes in comparison to direct budget expenditures. Show Us The Money, a report by the Georgia Budget and Policy Institute, explains why we need this form of transparency. (24 pages, 384K)
We need to work on the revenue side of the ledger as well as on the
spending side.
In the fairly short run, Georgia can recover hundreds of millions of dollars by closing corporate tax loopholes and selectively de-linking our tax code from some recent federal tax changes. We can ask the wealthiest filers to carry their fair share in preserving essential service infrastructure. This linked analysis below describes some of these options and estimates how much money could be raised.
It is well documented that Georgia’s present tax system is archaic, with sales taxes reflecting an agricultural/industrial economy rather than today’s more service-oriented economy and with an income tax that is essentially flat. The burden of taxation falls more heavily on the poor and the middle class. Unless the structure is revised, it will not produce steady revenues that are adequate to meet the state’s needs.
We need to make Georgia’s tax system fair.
Georgia’s low and middle income families pay a disproportionately high share of state and local taxes compared to the wealthiest taxpayers. According to a report by the Institute on Taxation and Economic Policy, a Georgia family with income of $30,000 pays an effective tax rate of nearly twice that of a family with $995,000 in income. Poor families pay an even higher effective rate.
Resources on Revenues:
- DOING BETTER: FAIR AND ADEQUATE TAX REFORM IN GEORGIA by the Georgia Budget and Policy Institute
- ITEP Study — GA Taxes Hit Poor and Middle Class Much Harder Than the Wealthy (125 pages - 1.4Mb)
- Revenue Alternatives by Georgia CURB
- 2003 Handbook on Georgia’s major state and local taxes 2003 by the Andrew Young School of Policy Studies, Fiscal Research Program
- BudgetNote-9 — Per Capita Taxes and Income by the Andrew Young School of Policy Studies, Fiscal Research Program
- A GEORGIA FISCAL HISTORY OF THE PAST 40 YEARS by the Andrew Young School of Policy Studies, Fiscal Research Program
- REVENUE LOSSES FROM EXEMPTION OF GOODS FROM THE GEORGIA SALES AND USE TAX by the Andrew Young School of Policy Studies, Fiscal Research Program
- Tax Modernization, Fiscal and Public Policy by the Georgia Budget and Policy Institute (1 page - 23Kb)
- Moving Closer to Proportional Taxation by the Georgia Budget and Policy Institute (1 page - 72Kb)
- Modernizing Sales Taxes by the Georgia Budget and Policy Institute (1 page - 29Kb)
- Modernizing Income Taxes by the Georgia Budget and Policy Institute (1 page - 28Kb)