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1 Patrick Fleenor, Georgia Tobacco Tax Favors High-Income Counties 1 (2010)

handle is hein.taxfoundation/ffcbbxz0001 and id is 1 raw text is: FISCAL FOUNDATIONF SA February 17, 2010 FA C T No. 211 Georgia Tobacco Tax Favors High-Income Counties By Patrick Fleenor Introduction The flood of new, detailed data on public finance in usable formats continues to change what's possible when analyzing public policy. Data on personal consumption of products can be combined with tax and spending data to reveal enlightening patterns. Tobacco is often at the forefront of this type of analysis because health-related studies track its consumption carefully and because taxes on it are generally high and well documented. Consider Georgia's cigarette excise. The Georgia Department of Human Resources divides the state into 18 public health districts and publishes data on the rate of smoking in each. Since cigarette tax revenue goes into the general fund, providing benefits to residents in the same proportions as other general fund money, we can safely conclude that the cigarette tax transfers funds from areas with high smoking rates to those with low smoking rates. The biggest winners in this fiscal transfer were the Cobb-Douglas and Fulton health districts. Cobb-Douglas received $1.29 in state services for every $1.00 its residents paid in cigarette taxes for a total gain of $4.2 million. Similarly, the Fulton health district, comprised entirely of Fulton County, receives $1.27 in spending for every $1.00 in cigarette taxes paid, for a total transfer of $4.7 million. Most analysts would consider this exchange inequitable because the residents of Cobb, Douglas and Fulton counties have higher-than-average incomes: 20 percent higher in Cobb-Douglas and 60 percent higher in Fulton, as compared to incomes in the rest of the state. On the most extreme paying end of this transfer is the Northwest health district, comprised of Bartow, Catoosa, Chattooga, Dade, Floyd, Gordon, Haralson, Paulding, Polk and Walker counties. On net, the state's fiscal system provided 78 cents in benefits to this region for every $1.00 it extracted in cigarette tax revenue for a total loss of $3.8 million. The next biggest loser was the North Georgia health district which is comprised of Cherokee, Fannin, Gilmer, Murray, Pickens, and Whitfield counties. Patrick Fleenor is chief economist at the Tax Foundation.