Taxes and the Poor Mouth

“We are a poor state.”

That’s the excuse often offered to explain why Alabama is at rock bottom among the 50 states, even below Mississippi, in raising revenue for state services. And it was one of the propositions examined in a study by the Public Affairs Research Council of Alabama, reported by political columnist Bessie Ford in the June 2001 issue of Business Alabama.

Although Alabama has fewer resources to tax than most states, fact is six other states had smaller levels of taxable resources than Alabama, according to the study by PARCA, a public policy think tank based at Samford University.

In addition to having a small resource base, Alabama taxes those resources at a low rate, according to PARCA. Alabama’s tax rate ranked lower than all other Southeastern states except Louisiana and Tennessee, and those states had larger or broader tax bases that allowed them to collect more tax dollars per capita than Alabama.

But not all of Alabama’s taxes are low, PARCA found. The more regressive are above the national average. Alabama was 20 percent above average in sales tax reliance, 20 percent below average on income tax, 60 percent below average on property tax.

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“Tax revenue gaps of this size with neighboring states inevitably affect the quality and quantity of public service that can be delivered, ” PARCA concluded. 

By Chris McFadyen

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