In the News
Blocking fairness
May 13, 2008
Birmingham News, 05/13/08
THE ISSUE: Whatever compromise plan can make it through the Legislature mustn't compromise efforts to make the state's tax system more fair.
The road to a fairer tax system for Alabama features more twists and turns than the Barber Motorsports Park racetrack. It also offers something motorcyclists there don't have to confront: roadblocks galore.
This year's legislative travels - or maybe, ultimately, travails - have brought the state to the brink of righting some of the worst injustices in our tax system but for one obstruction that could kill the effort: the Alabama Senate.
Last week, supporters of a bill that would remove the 4 percent state sales tax from groceries and lower the state tax burden for most Alabamians failed to round up enough votes in the Senate to pass the plan. Thursday, the bill's sponsor, Rep. John Knight, D-Montgomery, spent hours trying to find the 21st vote needed for the Senate to approve his plan and put it on the Nov. 4 general election ballot for people to vote on. Because Knight's plan would change the constitution, at least 21 of the 35 senators must approve it, and so must voters.
But Knight is stuck on 20, and the session has one more day, May 19. Republicans, who overwhelmingly oppose his plan, are threatening to use delaying tactics on the last day to block a final vote. With 21 votes in the Senate, any delay can be broken.
Knight in Saturday's story in The News said he feels good about his chances. But at this point, Knight might have to alter his plan to get it to pass.
Knight has proposed removing the state sales tax on groceries and raising the state's income tax filing threshold from $12,600 to $20,000, reducing income taxes for poorer Alabamians. His plan would pay for those tax breaks by ending the federal income tax deduction on state income taxes. Alabama is one of only three states that allows tax filers to deduct 100 percent of their federal taxes paid on their state income taxes.
Knight has offered to make changes to reduce the plan's cost, such as not taking the state sales tax off soft drinks and not raising the standard deductions or exemptions for state income tax filers. That would mean fewer people would lose the federal income tax deduction. So far, Republicans have rejected that idea.
Gov. Bob Riley has proposed a compromise some Republicans have touted that would reduce the state sales tax on groceries to 1 percent. Riley's plan also would raise the income tax filing threshold from $12,600 to $15,500 over five years. But the main attraction, at least for Republicans, is ending the state's annual property tax reappraisals and returning to reappraisals every four years.
Ending annual property tax reappraisals would reduce city, county and state property tax collections by $95.2 million over a three-year period, according to the Legislative Fiscal Office. On a practical level, that's less money for state and local governments, including schools. Some of those governments have pledged money from annual appraisals to bond debts and long-range plans. As public policy, reappraising property for tax purposes once every four years makes no more sense than paying income taxes and sales taxes on salaries and food costs frozen for four years at a time.
It's a political popular issue - almost as good as "no new taxes" - and could even help a tax fairness plan pass with voters. But Knight should resist the urge to agree to bad public policy to get his plan through the Legislature.
The road to tax fairness shouldn't include a detour into political pandering.
