Tax Reform

Grocery Tax Policy Choices 2012

Alabama's tax system is upside down, and the state sales tax on groceries is one reason why. Alabama remains one of only two states -- the other is Mississippi -- with no tax break on groceries. Food costs consume a larger portion of the household budget for low-income families than for those who are better off, so the grocery tax hits low-income people especially hard. The grocery tax is part of why Alabama's overall tax system requires low- and middle-income people to pay twice as big a share of their incomes in state and local taxes as the riches households pay.

Read issue brief here.

A Tax on Survival: Grocery Tax Policies in America

Food takes a much bigger bite out of the household budget for low-income families than for richer ones, and sales taxes on groceries thus hit harder at lower incomes. In recognition of this fact, most states either have exempted groceries from state sales taxes entirely or have devised ways to help offset grocery taxes for low-income people. Alabama and Mississippi stand alone in offering no tax break break on groceries.

This fact sheet considers the effects of grocery taxes on low-income households and examines the ways that Alabama could reduce or eliminate its sales tax on groceries.

Out of Step: Alabama's Unusual State Tax System

Partly by accident and partly by design, state taxes affect Alabamians differently than people almost everywhere else.

This fact sheet looks at the various ways in which states collect revenue and examines some of the differences that place Alabama's tax system out of line with the way most other states do things.

A Sense of Scale: Small Businesses in Alabama

Lawmakers often debate how a bill would affect small businesses, but no single official definition of "small business" exists. What are small businesses, anyway? How are they taxed in Alabama? And do small businesses survive or fail because of taxes, or do other factors play larger roles?

This fact sheet answers these questions and more.

A bill to remove the state grocery tax

Tough times have made it harder for many Alabama families to make ends meet. As the nation recovers from an economic recession that has driven the state's unemployment rate into the double digits, Alabama remains one of only two states -- the other is Mississippi -- that continue to offer no tax break on groceries.

HB 1, sponsored by Rep. John Knight, would amend the Alabama Constitution to remove the state portion of the sales tax on groceries and cap the state deduction for federal income taxes.

Read fact sheet here.

Big Piece of a Small Pie: Alabama's Tax Paradox -- UPDATED

If you talk to a low-income Alabamian about the state's tax system, you're liable to hear two things. One is a boast that the state has some of the nation's lowest taxes. The other is a complaint that, nevertheless, the person pays too much in taxes. The statements may sound contradictory, but both are grounded in reality.

This fact sheet examines an Alabama tax paradox: that low-income residents pay so much in taxes even as their state collects comparatively little money for the public services that can help make their lives better.

House Bill 1 -- New and improved!

This year's grocery tax bill will help families make ends meet without costing the state budget a cent. We've tweaked the details, but we haven't changed the core elements. The bill will remove the state portion -- 4 percent -- of the sales tax on groceries. To protect funding for schools, the lost revenue will be replaced by ending a huge tax deduction for the highest earners. Now 96 percent will pay less.

Read more here.

2009 Tax Fairness Amendment

The details of the 2009 Tax Fairness Amendment are changing frequently as the house bill's sponsor seeks the three-fifths support necessary for debating the measure. This fact sheet outlines the bill's provisions as of March 23, 2009.

Read the fact sheet.

The 2009 Tax Fairness Amendment FAQ

Get the answers to some frequently asked questions about the 2009 Tax Fairness Amendment.

Read the FAQ.

Tax Fairness Amendment impact chart 3-19-2009

This chart shows the 2009 Tax Fairness Amendment's estimated effects, as of March 19, 2009, on selected Alabama taxpayer categories.

See the chart.