Report: Georgia Taxes Working-Poor Further Into Poverty


ATLANTA (April 4, 2012)  – While most other states exempt working-poor families from the income tax, Georgia is one of a small number of states that continue to levy an income tax on working families living in poverty. By reducing state income taxes for working-poor families, Georgia could help these families work their way toward the middle-class, according to an annual report on state income tax trends.

Georgia is one of only 10 states to tax families of three who are living below the national poverty line and one of only 15 states to tax families of four below the poverty line.  The poverty line is $17,922 per year for a family of three and $23,018 per year for a family of four.

The findings were released today by the Center on Budget and Policy Priorities, a non-partisan policy research organization based in Washington, D.C.

One important measure of the impact of taxes on poor families is the income tax threshold – the income level below which a family owes no income taxes. In Georgia, the tax threshold is $12,700 for a family of three and $15,900 for a family of four both of which are significantly lower than the national poverty line. The income tax on families of four with poverty-level income has increased 55 percent, even after accounting for inflation, since 1994.

Taxing the incomes of working-poor families is contrary to years of bipartisan efforts at both the federal and state levels to help such families work their way into the middle class, the Center’s report shows. Many states have used state Earned Income Tax Credits (EITCs) to reduce or eliminate the income tax obligations of the working-poor.  State EITCs, modeled after the highly successful federal version, reward work by allowing struggling families to keep more of what they earn.

For two decades, an increasing number of states adopted EITCs and other tax credits and deductions to shield the working poor from state income taxes, but progress has stalled in recent years.

“By enacting a state Earned Income Tax Credit, lawmakers would not only help low-income families afford basic necessities, but also boost our state’s economy,” said Alan Essig, executive director of the Georgia Budget and Policy Institute.

Georgia is one of the states that lags behind, according to the report.

Georgia has never enacted an EITC, a policy tool that President Reagan called “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.” The state has a less-effective Low Income Tax Credit, but lawmakers sharply decreased its value in 2011. That same year, legislators enacted a several tax breaks for large, profitable businesses, including a $20 million subsidy for Delta. A more robust low-income tax credit would allow poor families to keep more of their hard-earned wages, putting money back in Georgia’s economy.

“Exempting working-poor families from state income taxes is good for Georgia economic future,” said Phil Oliff, co-author of the report and policy analyst at the Center on Budget and Policy Priorities.  “Raising the income of poor families boosts children’s chances of academic success and their earning potential in adulthood.”

The Center’s full report can be found at:


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  1. Pingback: Georgia’s Income Tax Essential for State’s Economy and Families | Georgia Budget and Policy Institute

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