The State of Georgia’s primary source of revenue is a production tax on individual income. In 2013, this tax is budgeted to account for 51% of state revenue. The State’s second largest source of income is a consumption tax (sales and use). In 2013, this tax is budgeted to account for 33% of state revenue.
When compared to the rest of the state, the City of Atlanta and intown DeKalb are disproportionately productive. Our per capita income ($36,272) exceeds the rest of the state ($24,489) by 48%. We account for 7.9% of Georgia’s income, though we only represent 5.5% of the population.
Since production taxes are directly tied to income and consumption also increases with earnings, the State of Georgia collects a disproportionately large portion of its revenue from Atlanta and intown DeKalb. In dollar terms, this means each year Atlanta and intown DeKalb pay about $340M more than a per capita share of production and consumption taxes (see attached calculation).
The State of Georgia spends this money in a variety of ways, but the biggest portion goes towards education. Forty-two percent goes to the Department of Education which funds local K-12 schools throughout the state1.
At the state level, the City of Atlanta and intown DeKalb are subsidizing education and other (smaller) services for the rest of the state.
Since federal income taxes are higher, progressive production taxes, it is safe to assume that our overall subsidizing of services consumed by the rest of the state greatly exceeds the $340M cited above.
All of this begs the question, why does the rest of Georgia seem to disdain such a benevolent benefactor?
- Jarod Apperson is a Midtown resident and CPA
Income and population figures were obtained from the 2010 census. Budget figures are for the Fiscal Year 2013 and were obtained from the Governor’s Budget Report.
1In calculating the percentage of spending, the Department of Transportation is excluded as its state funding is primarily derived from Gas Tax. The Debt Sinking Fund was also excluded as it is not a service.