Federal Tax Burden and Tax Breaks for Georgia Residents

The federal government collects approximately $1 trillion annually in income tax revenues, of which Georgia residents pay about $24 billion, or 2.4 percent. A myriad of deductions, credits, and exemptions complicates the calculation of federal income taxes. For example, the federal code offers special tax treatment based on the interest paid on a home mortgage, state and local tax collections, and contributions to charitable organizations. By offering forms of special treatment, the federal government must raise tax rates higher than they would otherwise need to be in order to collect required revenues. Given the many federal income tax reform proposals that call for the elimination of these special provisions, it is of interest to consider how such reforms might affect taxpayers in Georgia. This report describes the overall federal tax burden for Georgia residents, and compares it with other states. It also examines this burden in depth across areas of the state, and for various tax breaks in the federal tax code. This report is intended to inform Georgia residents about the federal taxes they pay, and how much they benefit from the major tax breaks in the federal tax code, especially relative to an alternative of increasing the standard deduction. We examine the federal income tax paid by Georgia residents and the benefits from popular deductions and credits in several ways. We describe the range in which these policies are used by determining the share of the population that files a federal income tax return, and the share of taxpayers who claim popular deductions and credits. We also examine how intensely residents use these policies, or the dollars in taxes paid and deductions and credits claimed. As part of our description of the intensive margin we describe the “net benefit” of the major tax breaks, which offers insight as to how Georgia residents would fare if major federal tax breaks were eliminated and replaced by an across the board increase in the standard deduction.https://epublications.marquette.edu/marq_fac-book/1111/thumbnail.jp