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Abstract: 

This research seeks to understand the financial impacts of a 1% local option sales tax that funds property tax relief in DeKalb County, Georgia. To develop and test the research proposition that trading sales taxes for property tax relief results in a more regressive tax system, the authors draw upon several incidence theories of taxation and make use of a 2001 telephone survey of county residents and the county’s tax digest data. The research finds support for the proposition; however, the sales tax also lowers the average tax liability and the tax burden of residents. The findings raise interesting questions for policy makers, citizens, bond rating agencies, and researchers regarding the equity effects of sales taxes that fund specific forms of property tax relief.

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Affiliations:  1: University of Georgia; 2: Northern Illinois University.