Who bears the burden of state taxes in Georgia?
March 20, 2009
Contact:
Leah Seupersad
University Relations
404-413-1354
lvh@gsu.edu
Study provides geographic analysis of who bears the burden of state taxes in Georgia
ATLANTA—Metro Atlanta contributes more to the state’s revenue than it receives in spending, according to a new report released this week by Georgia State University’s Fiscal Research Center.
Peter Bluestone, a research associate at Georgia State, says that every man, woman and child in the metro Atlanta area generated about $500 more in state revenue than it received in state expenditures. And although claims have been made regarding a potential geographic imbalance between revenues generated and expenditures made, there had been no attempt to document the geographic flow of money in Georgia, Bluestone said.
“The perception is different depending on where you live,” Bluestone said. “People who live in the metro area tend to perceive the metro area may not get its fair share of state revenue, and people who live outside the metro area may perceive that Atlanta gets more than its fair share.”
In the report, “Georgia Revenues and Expenditures: An Analysis of Their Geographic Distribution,” Bluestone analyzes the 2004 fiscal year for the 10 county core area defined by the Atlanta Regional Commission planning district as metro Atlanta and the 28 county area that the U.S. census defines as metropolitan Atlanta. Bluestone examined various revenue funds such as income tax, sales tax, lottery and expenditures such as Health care, public safety, transportation and education.
“The idea is to try to figure out who’s the final beneficiary of state revenue,” Bluestone said. “For instance, when you look at elementary or high school education it’s easier to track the beneficiary because the kids tend to go to school in the county in which they live. But in higher education, people from Atlanta go to college in Athens or may go down to Savannah. You have to track where those students are from and find some of the benefits to where they lived, rather than where they are currently going to school.”
In fiscal year 2004, Georgia spent approximately 56 percent of total general fund expenditures on education and 31 percent on health care, human resources and public safety. The remaining 31 percent was spent on various areas, such as government administration, transportation, environment and housing and veteran services.
Since education is one of the state’s biggest expenses, Bluestone says it’s just one example of how money flows end up being dispersed geographically.
“The state makes a concerted effort to spend money equal per pupil, but how it collects money is based on a progressive tax system,” Bluestone said.
Although Bluestone provides this preliminary analysis of why Atlanta carries the tax burden, he says the more important policy question is: “is whether the current net outflow of revenues less expenditures is too high or too low.”
“That is not an issue we address in this brief,” Bluestone said. “This is merely a starting point in the debate about economic growth in the state. In the light of the current economic conditions it may help as to where the state might focus to spend those resources where it might provide the biggest bang for the buck.”
To view Bluestone’s report visit http://aysps.gsu.edu/frc/3007.html.