The U.S. Census Bureau is reporting what most of us have already know: Alabamians pay the nation’s lowest state and local taxes per person. While that sounds good, it’s not good for many of our fellow citizens. That’s because Alabama families at the poverty level pay the nation’s highest income tax bill and that’s nothing to be proud of. The annual report by the Center on Budget and Policy Priorities, a nonprofit research group in Washington, D.C., is a good source of information on the subject. Kimble Forrister, executive director of the Arise Citizens’ Policy Project, had this to say about the situation:
Alabama may be called a ‘low-tax state,’ but our taxes aren’t low for everyone. Low- and middle-income Alabamians struggle to make ends meet, but compared to others across the country, they pay a high sales tax on groceries, and they pay twice as large a share of their incomes in state and local taxes as the top 1% of earners do. Alabama’s tax system is upside down and out of step with our neighbors.
Alabamians pay high sales taxes on groceries compared to folks in other states. In fact, Alabama is one of just two states that tax the full amount on food. Mississippi is the other state and I don’t guess that’s a big surprise. Other states exempt food, charge a reduced amount or offer tax credits to poor families.
The high state income tax and full sales tax on food makes it very tough on low-income families in Alabama. Families with incomes in the lowest 20%, with an average income of $10,400 a year, pay 10.2% of their incomes in state and local taxes, according to the Institute on Taxation and Economic Policy. Yet, Alabamians in the top 1% of incomes, with an average income of $1.2 million, pay just 4% of their incomes in state and local taxes after the federal deduction. In our state the wealthiest Alabamians can deduct federal income taxes they pay from their taxable state income. Alabama is one of three states that grant the federal deduction in full. All persons whose income places them in the top 1% of incomes should help convince our Governor and legislators to fix this situation.
The data from the Institute show that at least 60% of Alabama families pay a higher share of their incomes in taxes than the state average. Without any doubt, Alabama’s inequitable tax system has come about as the result of special interest influence. Over the years, the Legislature, prompted by lobbyists, has provided loopholes and exemptions for special interests in our state’s tax laws. Also, the state constitution which protects the wealthy is part of the problem. All together, much of the state’s wealth is sheltered from being taxed. The tax system is designed to favor the rich over the poor. Hopefully, in the near future we will see some real tax reform in our state and give relief to low-income Alabama families.
Source: Birmingham News
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