More work to be done on keeping taxes low
Recently the U.S. Census came out with its annual economic figures for the states, and one statistic received a great amount of attention in Alabama: we have the lowest taxes in the nation.
Now this is nothing new. Alabama’s state and local taxes have always been either the lowest or near the lowest in the nation. The most recent figures in 2007 showed that Alabama collected an average of $2,909 in state and local taxes per person. The national average was $4,011.
There has been a long standing sentiment by Alabamians to keep taxes low, and the Legislature has heeded that. We do more with less in state government, and we stretch every tax dollar further than most states because we have less to work with.
Sometimes, though, this can have an adverse effect on things like education, which we can all agree should get more funding. During the boom times earlier in this decade when there was full employment and the economy was expanding, we were able to invest millions in Alabama’s schools. We fully funded the Alabama Reading Initiative, reduced class sizes and improved classroom materials.
What we got for the investment was the largest jump in elementary reading scores in the nation, a major increase in advanced placement studies, and across the board improvement in teaching and learning. When it comes to schools, more funding works-simple as that.
The recession has caused proration, and we will spend more than $1 billion less on in education this year than just two years ago. We are working hard to stretch education dollars further, delaying the purchases of things like buses and textbooks. Yet proration and instability in education revenue show inherent flaws in Alabama’s tax system.
A recent report showed another major problem with Alabama’s taxes: not everyone is paying the lowest.
The Center on Budget and Policy Priorities, a national non-partisan research group, released a report showing that Alabama working families pay higher income taxes than most other states. The report said a family of three making $22,000 a year pays $483 in income taxes, which is the highest in the nation.
Taxes that hit working families harder than those of big business and upper income levels add to the disparity. The prime example is the sales tax on food. Alabama is one of only two states collecting sales taxes on groceries, and food is often one of the biggest outlays in a family budget.
We have taken steps to amend the unfairness in recent years. A few years ago, we raised the threshold where a family of four starts paying state income taxes to $12,600. It was a good first step.
We also worked to remove the sales tax on groceries, and a bill was introduced by Rep. John Knight in the last legislative session to do just that. The bill recognized that every penny collected at the checkout line goes to schools, so there had to be a way to make up for the shortfall.
Folks in the highest income levels and major businesses would still have the lowest taxes in the nation by far if the Knight bill passed. However, it didn’t. Though the vote was 59-41 in favor, because of a procedural rule it wasn’t enough of a majority, and the bill died.
Nobody likes taxes. Nobody likes paying taxes. It is why we have worked so hard to keep them low. Only when folks know exactly where their taxes are going, like to schools, is when we tolerate them.
Something else that just about everybody can agree on is that taxes should be fair, and people should share the burden equally. We should work just as hard to see that this happens as well.