Arise Citizens' Policy Project

Family of four at poverty line?
June 4, 2009

Alabama had the nation's highest income tax for a two-parent family of four at the poverty line in 2007, and the amount they owe in 2008 is even higher. A family of four at that income, which was estimated at $22,017 in 2008, owes $483 in Alabama income tax. The state income tax on the same family in 2008 would be $222 in Georgia and $73 in Mississippi.

Alabama's income tax threshold — the income level at which an earner begins to owe tax — was the nation's third lowest in 2007, ahead of Montana and West Virginia, according to the Center on Budget and Policy Priorities, a nonprofit research group in Washington, D.C. Since then, a change in West Virginia law has doubled that state's threshold.

Alabama's $483 income tax bill for families at the poverty line is a reminder of how much the state's tax system requires of low-income residents, even as the U.S. Census Bureau ranked Alabama 50th in state and local tax collections per person in 2006.

You hear Alabama called 'a low-tax state,' but taxes aren't low for everyone. Low-income and middle-income people pay more than twice as big a share of their incomes in state and local taxes as the top 1 percent of earners do. It's an upside-down tax system.

Alabama's tax policies are out of step with most other states in other ways as well. Alabama has some of the nation's highest sales taxes and is one of two states with no tax break on groceries.

Taxes on necessities like food hit everyone, but they hit low-income people the hardest.

Jim Carnes
Communications Director
Arise Citizens' Policy Project
Montgomery