1.
It is an important first step toward Tax Fairness
·
Currently, Alabama has one of the most unfair tax systems in
the country by taking a bigger percentage of money from those who can
least afford to pay. Right
now, our current tax system does that by relying on high sales taxes and
by making people who make as little as $90 per week (or $4,600 per year)
to pay state income tax.
·
The new tax reform plan would allow people to make nearly
$400 per week ($17,000 per year) before they would pay state income tax.
·
It shifts the tax burden from those who can afford it the
least onto those who can
afford the most and who have been paying the least percentage of their
income in taxes.
2.
It meets
the deficit we face for the coming year, and it provides funds needed for
genuine progress, especially in education
·
The state of Alabama must pass a balanced budget by
September 30 of each year by constitutional law—or state government must
suspend all of its operations until a budget is adopted.
·
There is a $675 million deficit for the coming year, because
of the economic downturn and increased expenses in health care, prisons,
law enforcement, nursing homes and education.
·
Simply erasing the deficit would do nothing to solve our
long-term financial needs, and it would do nothing new to address many of
Alabama’s historic problems of being at the bottom of nearly every
measure of social well-being.
·
The progress made in other states (North Carolina,
Massachusetts, etc.) shows that investment in education can have DRAMATIC
results.
3.
Most of us (65% of us) will pay less or the same
·
The average person will see either a decrease or no change
in the overall amount of taxes you pay.
Some lower-income people’s income taxes will be eliminated, and
others will have their increase in state taxes more than offset by recent
federal tax cuts or the raising of the child deduction in figuring state
income tax.
·
Alabamians over 65 will remain exempt from all state
property
taxes on the home in which they live.
4.
The Biggest Changes in Our Taxes?
·
Eliminating state income taxes for those who make
less than $400 per week ($17,000
a year rising to $20,000 over the next three years)
·
Increasing the homestead exemption from $40,000 to
$50,000. A homeowner living in a $100,000 home would pay approximately
$132 more per year in property taxes.
·
Ending the state income tax deduction for federal taxes
paid;
· Raising
the deduction for children from $300 to $2170 per child in figuring state
income tax.
·
Raising the state income tax rate from 5 percent to 6
percent for individual incomes over $75,000 and family incomes over
$150,000.
·
Assessing property at 100 percent of its market value or
current use value for the state portion of property taxes, while
lowering the millage rate from 6.5 mils to 3.5 mils. This will produce a
relatively small tax increase in real dollars for those who own property
worth more than $50,000. Alabama will still have some of the lowest
property taxes in the country.
5.
The total amount of all taxes will be the same or
lower for most people, even though the amount of certain Kinds
of Taxes may change
·
The new tax reform plan does bring in more tax money
because it
o
raises the cost to register a mortgage or deed
o
raises public utility companies’ taxes on gross revenue
o
increases sales taxes on new cars (by 1%), vending machines
(by 1%) those who do repair and installation work (to 4%) and ends the
exemption on lube oil and sets the tax rate at 4 cents per gallon.
o
eliminates the deduction of federal income tax paid for
individuals and corporations
o
raises taxes on insurance company profits
o
eliminate certain sales tax credits for banks
o
raises the cigarette tax from 16.5 cents per pack to 31
cents, and it includes smokeless tobacco
o
raises the assessed value of property for tax purposes
(while it lowers the tax rate from 6.5 mils to 3.5 mils).
o
raises the taxes on those who own more than 200 acres and
phases in further increases on those who own more than 2,000 acres
BUT
·
The new tax reform plan lowers taxes for most people
because it
o
lowers income taxes for people who make less than $17,000
(eventually rising to $20,000 over three years)
o
raises homestead exemptions for people who live on their
property from $40,000 to $50,000
o
creates a farmstead exemption for owners of up to 200 acres
who live on their property
o
retains “current use” valuation (a significant tax
savings) for people who own less than 2,000 acres.
O
lowers taxes on the first $40,000 of annual income from
pensions and retirement programs (401K).
6.
For the 35% of Us who Will Pay More, we are doing no
more than paying our fair share after years of benefiting from the poor
paying more than their share.
7.
Tax Reform is Good for All of Us
·
The new revenues to the state (estimated at $1.2 billion)
will improve life for all of us
o a sound budget with
additional funds to meet our people’s essential needs
o a reformed education system for our children, including
expansion of the Alabama Reading, Science and Math
initiatives that are currently under-funded here but used with major success elsewhere
o
increased opportunities and financial support for every
Alabamian to go to college
For
more information:
Greater
Birmingham Ministries www.gbm.org
(205) 326-6821
2304 12th Avenue North, Birmingham, AL 35234
OR:
