Time to end the tax on our daily bread
By By Johnny Mack Morrow
Give us this day our daily bread. For many Alabama families that is getting harder and harder to do. But if a measure recently passed by the Alabama House eliminating the state sales tax on groceries becomes law, many families will find some relief.
On April 15, appropriately on tax day, the House passed on a largely party-line vote a Constitutional amendment that will eliminate the state sales tax on groceries. It will also raise the threshold that average families start paying income taxes from around $12,600 to about $20,000. The measure, championed by Rep. John Knight (D-Montgomery), will provide tax relief to most Alabama families, and reduce the burden on working parents who make low wages.
Now the measure goes to the Senate, and if it passes there, then to a vote of the people in November. It is a good measure, and will be a major step in making our revenue system fairer for those who work and need to feed their families.
Only Alabama and Mississippi have a tax on food, and it is the harshest tax there is for working families with children. Average Alabama families spend more on food than almost any other thing in their lives, including housing and transportation. The problem is getting worse, with inflation on food the highest it has been in almost two decades.
The measure ends the deduction we take off our state income taxes on the federal income taxes we pay. That way the measure is for the most part revenue neutral. The vast majority of Alabama families will see a large tax savings simply because we pay more in grocery taxes than we save on the federal deduction.
The Legislative Fiscal Office estimates that more than 80 percent of all Alabama households, and even more Alabama families with children, will gain a tax break from this measure. Knight's bill will save folks $320 million when the four percent state sales tax is removed, while eliminating the deduction raises about $340 million for schools.
This tax cut benefits middle and upper-middle class families. Knight says a married couple filing jointly earning $125,000 would have a tax savings of $245, a married couple filing jointly earning $100,000 would have a savings of $537, a married couple with one child earning $100,000 filing jointly would save $837. These are real savings for families that could sure use the money.
Some folks will have to pay more under the plan. Knight says households earning in the $300,000 range is where the loss of the federal tax deduction begins to really be felt. However, it is important to remember that Alabama has the lowest taxes in the nation, especially for those in the top 10 percent income bracket, and the loss of the federal deduction will not change that fact.
Major benefits will come for those families at the lower end of income scale. Alabama has one of the harshest tax systems in the nation, where working families pay twice as much of their income in taxes as do those who are well off, mainly because of the levy on food and other necessities. The Knight measure will be a giant step forward in making our tax system fairer.
Even in the wealthiest suburbs, a majority of families will benefit from this bill. Only those at the very top will have to pay more, and they are already paying less. Here is to hoping that the Knight bill passes the Senate, and is approved by voters in November. Then we will all get to decide whether our grocery bills can finally start coming down.
Johnny Mack Morrow is a state representative for Franklin County. His column appears each Wednesday.
