A new national study shows Alabama levies more income tax than any other state on a family of four living at the federal poverty line. A couple with two children making $21,203 annually in Alabama pays $423 in state income tax. An Associated Press article pointed out that if the same family moved across the state line to Mississippi, they would pay $48. The study by the nonpartisan Center on Budget and Policy Priorities in Washington also says Alabama still has one of the nation’s lowest thresholds for paying income taxes, despite raising the threshold significantly in 2007 to help the working poor.
The Alabama Citizens’ Policy Project, a Montgomery group that works on behalf of Alabama’s poor, said the study raises concerns that Alabama’s tax structure is sending the poor even deeper into poverty. Kimble Forrister, the project’s executive director, said:
Alabama is still requiring hundreds of dollars a year from families who are struggling to keep their heads above water.
The study, based on 2007 numbers, says Alabama was one of 18 states that levied an income tax on a family of four making less than the federal poverty level. In Alabama, the family of four paid $423, followed by $409 in Hawaii, $325 in Oregon and $258 in West Virginia. Illinois, Indiana, Iowa, Michigan and Montana also required a family of four living at the poverty line to pay more than $200 in state income tax, the study said. Alabama used to have the nation’s lowest threshold for requiring a family of four to start paying state income taxes. But in 2006, the Governor and Legislature worked together to raise the threshold from $4,600 to $12,600, starting with the 2007 tax year. That dropped Alabama to third, behind West Virginia and Montana.
Alabama was one of 13 states that took steps in 2007 to reduce its taxes on the poor. “Progress is occurring slowly, but states increasingly realize that taxing people deeper into poverty is counter-productive,” according to study co-author Jason Levitis. In the regular session this year, the Alabama Legislature fell one vote shy of passing more tax cuts for low-income citizens and removing the state sales tax on groceries. The proposal passed the House, but failed in the Senate. Many Democrats wanted to replace the lost income tax revenue by eliminating Alabama’s income tax deduction for federal income taxes paid. That deduction primarily benefits higher income taxpayers. The sponsor of the tax plan, Rep. John Knight, D-Montgomery, who plans on trying again when the Legislature returns in February, had this to say:
It is just morally wrong to have basically the lowest income tax threshold and the highest tax on poor people in the nation.
I totally agree with those at Alabama Arise and with Rep. Knight on their assessment of our current tax structure. I believe strongly that it’s time for Alabama to change the way we tax folks. The Governor and the Legislature should make tax reform a top priority in 2009. Hopefully, that will happen. If you agree, let Gov. Riley, Lt. Gov. Folsom and your legislators know how you feel.
Source: Associated Press
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