Monday, January 09, 2006
On this day:

Riley: Cut income taxes

In his upcoming State of the State address, Governor Riley will ask the legislature to raise the threshold for paying income taxes and to phase in higher exemptions for individuals and their dependents. According to the Montgomery Advertiser (registration required, I think...AP story here):

Gov. Bob Riley thinks it's "unconscionable" that Alabama taxes its working poor the way it does -- and he wants to do something about it.

On Tuesday, when the Legislature convenes for its new session, Riley will propose reducing income taxes across the board by phasing in higher personal and dependent exemptions and standard deductions over five years.

By 2011, a family of four would start paying income taxes at $15,000. That dollar figure today is $4,600, unchanged since 1982 and the lowest income tax threshold in the nation.

The proposal would raise the personal exemption from $1,500 to $2,000 and the dependent exemption from $300 to $2,000. Neither has been increased since 1935, when the state income tax was implemented.

While the Governor's plan would cut taxes for everyone who pays the state income tax, its greatest impact would be felt by individuals and families in the low to middle income range.

Alabama's threshold for paying income taxes is currently the lowest in the nation. The burden it creates falls most heavily on those who can least afford it, penalizing work and making saving more difficult. Raising the income tax threshold is an issue that has been supported by Alabamians across the political spectrum. A similar measure was a component of the Amendment One tax and accountability package in 2003. Although Amendment One was defeated at the polls, it contained several provisions that should be revisited; this is one of the best of those.

The growing economy has taken care of the budget problems that many of Amendment One's supporters sought to alleviate. As a result, the need to offset a tax cut with corresponding tax increases has evaporated, and there is no good excuse for failing to act on this issue during the upcoming 2006 legislative session.