Alabama should reform income tax on the poor
People in poverty are not the ones from whom we should be collecting substantial tax revenue.
Yet the state of Alabama taxes a family of four whose income is only one-fourth of the federal poverty level, according to the Center on Budget and Policy Priorities, a Washington-based independent group.
Its report came out before Friday's filing deadline for state and federal income taxes. The report shows that in 2004, a two-parent family of four with a poverty-level income of $19,311 owed $513 in Alabama income tax. Only Kentucky was higher at $652, but Kentucky has already enacted some relief for 2005. Its low-income credit will shield poor families from paying tax.
For families of three with minimum-wage earnings ($10,712), Alabama's tax was the highest in the nation at $218. Alabama's threshold — the income level at which families begin paying tax — was the nation's lowest at $4,600.
Not only is it wrong to take so much money away from people who need it to support their families; it makes no sense. Many of them get money back in welfare payments, food stamps and the like. It would be more efficient to let them keep it in the first place.
In 2003, Gov. Bob Riley proposed raising the income threshold to $20,000 as part of a package that also would have raised taxes by more than $1 billion a year. Voters decisively vetoed that package.
But surely most Alabamians can agree on a limited tax reform that relieves our poorest families. It is time to do that.