February 18, 2010
High-Income Counties Benefit Most from Georgia Tobacco Tax, Study Shows
Wealthier Cobb-Douglas, Fulton Health Districts Receive Highest Amount in State Spending Services for Every Dollar in Cigarette Taxes Paid
Washington, DC, February 18, 2010 -- Georgia's tobacco tax benefits high-income counties the most by transferring funds to them in the form of state services from lower-income areas, according to a new Tax Foundation report. Residents of the Cobb-Douglas health district, whose incomes are 20 percent higher than elsewhere in the state, received $1.29 in state services for every $1 its residents paid in cigarette taxes, for a total transfer of $4.2 million.
In the Fulton health district, where the average income is 60 percent higher than in the rest of the state, residents received $1.26 for every $1 in cigarette taxes paid, for a total transfer of $4.7 million. Georgia's cigarette tax rate is 37 cents per pack.
"Because tobacco tax revenue in Georgia goes into the state's general fund, providing benefits to residents in the same proportions as other general fund money, we know that the cigarette tax transfers funds from areas with high smoking rates to those with low smoking rates," said Tax Foundation Chief Economist Patrick Fleenor, who authored the report. "The areas in Georgia with the highest smoking rates, such as the Northwest and North Georgia health districts, have lower-than-average incomes, while the areas with the lowest smoking rates, such as the Cobb-Douglas and Fulton health districts, have high average incomes."
Tax Foundation Fiscal Fact, No. 211¸ "Georgia Tobacco Tax Favors High-Income Counties," is available online at http://www.taxfoundation.org/publications/show/25864.html.
The Northwest health district loses the most in the funds transfer: Its residents received 78 cents in benefits for every $1 paid in cigarette taxes, for a total loss of $3.8 million. The next-biggest "loser" was the North Georgia health district, whose residents received 82 cents for every $1 in cigarette taxes paid, for a total loss of $2.1 million.
In some counties, such as those in the North, West, Central and East Metro health districts, spending is roughly equal to cigarette tax revenue.
"Cigarette taxes are extremely regressive, taking a much higher percentage of income among the poor," Fleenor said. "The 20 percent of Georgia residents who earn the least shoulder a tobacco tax burden 18 times greater, as a percentage of income, than the tax burden of the 20 percent of residents who earn the most."
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
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Tax Foundation Fiscal Fact, No. 211¸ "Georgia Tobacco Tax Favors High-Income Counties," is available online at http://www.taxfoundation.org/publications/show/25864.html. To schedule an interview, please contact Natasha Altamirano, the Tax Foundation's Manager of Media Relations, at (202) 464-5102 or naltamirano@taxfoundation.org.