Fair is fair: Time to tax groceries
Published 11:49 am Tuesday, March 17, 2009
Tax fairness is a simple idea: people should pay their share for important and necessary things like schools and public safety. Yet it is one of the hardest things to achieve because often special interests don’t want tax fairness, they want the best deal for themselves.
In Alabama we have the overall lowest taxes in the nation, doing more with less than any other state, and stretching each taxpayer dollar further. Alabamians like it that way, and those of us in the Legislature hear the people’s wishes.
Yet taxes are not the lowest for everybody. The less you make the more of your income you’ll pay in state and local taxes, because our system favors those making more.
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If you make over $150,000 a year, you have some of the lowest taxes in the nation by far, paying about six percent of your income in state and local taxes.
The average Alabama family makes about $40,000 a year, and pays approximately ten percent of their income in state and local taxes. The reason for the difference is the kind of taxes we have in Alabama: the lowest in the nation on property, deductions slanted to higher incomes, and taxing things like groceries.
Alabama remains one of only two states, along with Mississippi, that taxes groceries. The state sales tax is four percent, and local taxes can range from two to six percent depending on the county. Every time a parent goes to the checkout line to buy milk and bread they pay sales taxes.
Working families spend more of their income on food, and for anyone who has children or grandchildren it is not difficult to understand why. To put dinner on the table is expensive, and families are always looking for ways to cut down on food costs, especially in tough times like these when you have to stretch paychecks.
It is time to help. It is time to eliminate the state sales tax on groceries.
The Tax Fairness Amendment by Rep. John Knight (D-Montgomery) will be up for a vote in the House in the next couple of weeks. The bill would exempt groceries from state sales taxes, providing an immediate four percent cut in a family’s food bill and a giant step toward making our state taxes fairer.
Every penny collected by the state sales tax is earmarked for education, and if we just eliminated groceries it would blow a $350 million hole in the state school budget. Our schools are already reeling from proration and budget cuts, and we are far below the national average what we invest in our children. We must eliminate the food tax without hurting schools.
To make up revenue, the Tax Fairness Amendment changes the federal income tax deduction on state income taxes. Alabama is only one of a handful of states that allows this kind of deduction, one that overwhelmingly favors those making more.
Knight’s bill is revenue neutral, it does not raise overall taxes. Yet when it is enacted more than 90 percent of Alabama families will receive a tax cut, an immediate four percent reduction in the weekly grocery bill. Those in the top five percent income bracket will see their taxes go up less than a half-point, mostly because they spend much less of their income on food, and they still will be paying the lowest taxes in the nation.
The bill is a constitutional amendment, and the voters will get to decide whether it become law if the Legislature passes it. You can’t get any fairer than that.
But there is opposition to the bill, and it will be a battle to get the three-fifths majorities needed in the House and Senate to pass a constitutional amendment. Whenever there is a serious step to making things fairer there always will be opposition. It is only natural that some interests are only concerned with themselves.
AJ McCampbell is a state representative serving Marengo County.