More Tax Cuts in Alabama?


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Alabama Governor Bob Riley recently unveiled his legislative agenda which included targeted tax cuts for families with incomes less than $100,000. In his State of the State address delivered on Wednesday Riley said, "Our proposal builds on our earlier tax cut and will make the first $15,000 of income for a family of four tax-free. With this plan, 90 percent of Alabama's families will receive a tax cut."

But as the editorial board at the Tuscaloosa News points out, there are better strategies for making Alabama's tax system less unfair. A plan sponsored by state House member John Knight, and championed by Alabama Arise, would tie the state's low standard deduction to the (much higher) federal deduction amount. This approach is preferable to the Governor's plan not only because it would immediately increase the "no tax floor" for low-income families more than the Riley plan, but also because it would eliminate the state sales tax on groceries and pay for these tax cuts by repealing the state's unlimited deduction for federal income tax payments -- a high-end tax loophole that only two other states allow.

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