Taxing the Poor to Balance the Budget in Georgia

Yesterday, on the Ed Show, Ed Schultz did a segment on Georgia’s plan to raise taxes on Girl Scout cookies, at the same time as cutting corporate taxes. It’s not just Girl Scout cookies, of course, as it impacts sales taxes generally, and as Ed remarked, such taxes fall heaviest on low & middle families. This is particularly true in Georgia, as can be seen from the chart below, from the 2009 report, “Who Pays? from the Institute on Taxation and Economic Policy:

Doing a bit of math with the table that accompanies this chart in the report, we find that sales and excise taxes account for 7.8% out of the total 11.7% that the lowest-income 20% of Georgians pay in state and local taxes, meaning that sales taxes make up 67% (or 2/3rds) of all taxes that they pay. This compares to 0.9% out of the total 6.9% that the richest 1% of Georgians pay in taxes, meaning sales taxes make up just 13% of all taxes that they pay. So sales taxes are 5.1 times as big a portion of the taxes paid by those on the bottom, compared to those on the top.

Now, it’s not actually THAT bad, since the sales and excise tax total includes general sales, others sales & excise taxes and sales & excise taxes on businesses. The general sales tax portion is “only” 4.4% on the bottom 20%, and 0.6% on the top 1%, which is 38% and 9% respectively of their tax totals. Still, general sales taxes are 4.3 times as big a portion of the taxes paid by those on the bottom, compared to those on the top. So raising those taxes will fall that much harder on the poor compared to the rich.