Taxing Alabama

Related stories: 05/28/03 As US cuts taxes, states hike them

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The cast includes Gov. Bob Riley, a social and fiscal conservative Republican who's stumping for a $1.2 billion tax reform and increase, and his own state Republican Party, which is just as adamantly opposed.

At issue are the state's $675 million deficit and its regressive tax system. Like most states in the 1990s, Alabama spent at a higher rate than its economic growth, only to be caught in a fiscal vise when revenues plummeted during the economic slowdown.

Meanwhile, state taxes are tough on the poor and easy on large corporations and the wealthy. The state income tax kicks in for families with as little as $4,600 in income, while the sales tax can run as high as 12 percent and includes groceries. The poorest Alabamians pay 11 percent of their incomes in state and local taxes, while the wealthiest pay a mere 3 percent.

Among other things, Governor Riley would eliminate income taxes on families of four making less than $17,000 and reduce an exemption that saves timber companies millions of dollars each year. But he would also raise taxes on sales, services, and property, hiking state income by twice what is needed to balance the budget. The extra money would promote education and fund college scholarships.

The Democrat-controlled legislature approved the package. But under the Alabama Constitution, voters must consent in a referendum, set for Sept. 9. That's where the plot thickens.

Riley is trying to win over black voters to his tax reforms. But he deeply angered African-American legislators when he vetoed a bill to allow felons who have served their sentences to regain voting rights. At the same time, the governor, a devout Southern Baptist, is trying to convince religious people that the current tax system is immoral and that the new plan is the Christian thing to do. But many conservative Christians are upset at his refusal to support Chief Justice Roy Moore during the recent flap over a Ten Commandments monument.

Polls indicate Alabama's voters - including blacks and those with low incomes - are not enthusiastic about the governor's proposal. Riley blames the complexity of the tax package.

The fiscally strapped state needs more revenue to improve its inadequate schools and to fund needed services. But Riley's laudable effort to reform taxes while hiking revenues could turn out to be the political equivalent of a box-office flop.