Georgia’s Revenue System Shaped by History of Racist Policies

The structure of Georgia’s modern revenue system—which determines how much money the state can use to fund Georgia’s budget—developed during the turbulent decades of the 1930s through 1960s, a period during which the state was primarily governed by segregationists who resisted New Deal-era federal assistance and struggled to finance basic government programs and services.

Structural racism exists when racist policies, practices, attitudes and other factors combine to create or perpetuate inequities. For example, racist policies and practices produced mass incarceration and worked alongside racism in hiring to worsen occupational segregation, where many people of color work in jobs that do not pay a living wage. As a result, unjust policies, like a regressive tax code, disproportionately impact workers of color and their families.

At the beginning of the twentieth century, Georgia generated most of its revenue from a state property tax, which in the intervening decades was weaponized to systematically disenfranchise, intimidate and economically harm Black Georgians. Property tax was implemented alongside the state’s poll tax, which was maintained until 1945. Property tax assessors were given wide latitude to favorably value white landowners’ property while leveraging tax assessments to push Black land and business owners into poverty and, in many cases, eventually seize their property. In 1929, the state adopted corporate and individual income taxes and, in 1937, established the relatively flat individual income tax bracket structure that continues to form the basis for the current tax code. In 1951, the state enacted a sales and use tax of 3 percent, which was increased to its current level of 4 percent in 1989.

As revenues from income and sales taxes increased, the state phased out its property tax and eliminated it in 2016; local property taxes remain. Historic injustices and harmful policies have resulted in vast disparities in income across race and ethnicity in Georgia. Regressive tax policies at state and local levels worsen those disparities by asking those making the lowest incomes to pay the largest share of what they earn in taxes.

Georgians with Lowest Incomes Pay Highest Share of Income in State and Local Taxes

People of Color Overrepresented Among Those Paying Highest Share

Taxes

Source: Institute on Taxation and Economic Policy, June 2023.