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.
Like snowflakes, no two tax systems are alike. Across the country, states have different taxes applied at different rates to different taxpayers and taxable "things." Alabama's tax system is skewed against its low-income residents and is out of line with the way other states do things.
A highlight of the 2006 legislative session was the passage of a law that raises the Alabama income tax threshold to $12,600 for a family of four, starting in 2007. Before the change, Alabama families owed income tax on earnings of $4,600 a year, the lowest threshold in the country.
Alabama should not tax people deeper into poverty. As low- and middle-income taxpayers filled out their 2007 income tax forms, they saw how tax reform helps their bottom line. But we still tax groceries, and for 2008 we still have the highest income tax for a family of four at the poverty line: $423.
This fact sheet explains how HB 274, the Tax Fairness Amendment, will help Alabama seniors on fixed incomes make ends meet.
A fair tax system will provide adequate funding for the common good, collect revenue according to ability to pay, give exemptions on the basic necessities of life, and collect funds in a simple and transparent way.
This fact sheet outlines the proposed Knight Tax Fairness Plan 2007.