Congratulations, fellow Georgian. In two days, you’ll be working for yourself instead of the government.
“Tax Freedom Day” is a way to visualize how much money the federal, state and local governments take from the average worker’s earnings. This year, Georgians must work 102 out of 365 days — 28 percent of the year — to pay for government’s demands, according to the Tax Foundation.
In hitting that milestone on April 12, Georgians are working three days more than last year to cover our tax bills. People in 16 states, including four of the five that border us, have already celebrated Tax Freedom Day.
But wait — how could we rank 34th in taxes paid? Isn’t Georgia the lowest-tax state around?
That’s the claim made by Democratic gubernatorial candidate Jason Carter, who last year received a “mostly true” rating from PolitiFact Georgia for saying, “We collect fewer state taxes per capita than any other state.” That claim, too, was based on data from the Tax Foundation. What gives?
What Carter said, a statistic echoed by many other liberals in Georgia, is technically true. (Or at least it was for 2011, the latest year for which data were available at the time.) But a statistic about state taxes leaves out something crucial about how much we pay for government: local taxes.
You see, only five states in 2011 were more dependent than Georgia on locally levied taxes: Colorado, Florida, Nebraska, Tennessee and Texas, according to data from the Tax Policy Center. Everywhere else, governments relied more heavily on state taxes.
Think about it: Almost all property taxes in Georgia are paid to local governments. In about one-third of our counties, plus Atlanta, the local portion of the sales tax matches the state’s portion. In most of the rest, it’s 3 cents to the state’s 4. Local governments also apply the sales tax to groceries, while the state doesn’t.
Given how many of our public services are delivered locally, that kind of tax structure makes sense. Local taxes pay for a larger share of education spending in Georgia, for instance, than in most states.
Someone who talks about our low state taxes without mentioning our relatively high local taxes might — just might, mind you — want to turn Georgia into a high-tax state.
So, where does Georgia rank, tax-wise? Our Tax Freedom Day ranking of 34th includes not just state and local taxes, but the taxes we pay to governments in other states: oil royalties to Alaska and Texas, for example, or sales and hotel taxes to Florida and other states where we go for vacation.
Other Tax Foundation data break out these taxes paid to other states. Looking again at 2011, the proportion of per capita income Georgians paid to our own state and local governments came to 6.1 percent, good for 32nd nationally.
That’s much closer to the middle (Nebraska, at 6.6 percent) than to the bottom (Wyoming, 3.2 percent).
And we can expect Georgia to drift toward the higher-taxed states. That’s because these data are backward-looking — to a time when we were at rock bottom fiscally, thanks to a recession that hit our housing-dependent economy especially hard.
But over the past year, Georgians have been going back to work and getting raises at a brisker pace than most Americans. Our unemployment rate in February was 1.4 percentage points lower than a year earlier, halving the gap between our rate and the national rate. Personal income grew faster in Georgia than the U.S. average in 2013, the third straight year we have equaled or exceeded national growth.
If moving up in the tax standings is appealing, this all may sound comforting. But if that’s a race you’d rather not win, you might be thinking the time is ripe for some truly comprehensive changes to our tax code.
You and me both.
