We've got to help get the tax reform package passed. This is urgent.
I know that it is a Republican governor that has proposed this plan. But that shouldn't deter us from seeing to it that it is passed by the voters.
It is a PROGRESSIVE tax plan. And if you don't believe that, then why is the governor just about the only Republican that is for it?
Opponents of the plan have been sending out a misleading, fraudulent email regarding the plan -- most of you have probably received it in your inbox.
A point-by-point rebuttal to that email is available at
http://www.abetteralabama.org/news/didyouknow081103.shtml, but I am posting it here to make sure you notice it. Spread this far and wide to every Alabama voter that you know.
This is truly a chance to move our state forward!
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A Point-by-Point Response to a Broad "Did You Know" Email about the Plan for Progress
**An email has been circulating among the people of Alabama that contains misleading information and details reasons why you should vote no. The following is a point-by-point response to every reason identified by the author and an explanation as to why you should vote YES on September 9th. Please feel free to copy and paste this response into an email and forward to anyone you know that may have received the original.
This is the truth about the Plan for Progress:
What They Say:
1) The Federal Income Tax deduction used to calculate State Income Tax is being eliminated? What does this mean? If your income is $60,000 and you pay $20,000 in Federal Income Tax, you currently pay 5% State tax on only $40,000 of income ($60,000 - $20,000). Bob Riley wants you to pay 5% on the whole $60,000 even though you NEVER RECEIVED $20,000 of it (the Federal Government has it).
NET EFFECT: $1000/year extra State tax out of your pocket for $60,000 income level.
The Truth:
First, no one making $60,000 pays $20,000 in federal income taxes. A family of 4, even at $75,000 of income, paid only about $6,200 of federal income tax in 2002, based on average deductions.
Second, the federal income tax deduction is only used in three other states and it is one of the most regressive portions of our current tax structure. Because wealthy individuals pay so much in federal income taxes, they get a disproportionate break in the amount that they pay in taxes in Alabama. The federal income tax deduction is really a break for the extremely wealthy. The poor and middle class get little or no benefit. The Plan for Progress makes taxes fair by eliminating this deduction.
In terms of the effect of this change on most working families, the example above fails to consider the increase in standard deductions for children from $300 to $2100. This change will work to offset the change caused by the elimination of the federal income tax deduction.
In addition, this example also fails to take into consideration that the elimination of the federal income tax deduction will also be offset by the significantly higher income tax threshold. A family of four currently begins paying taxes on $4,600 of annual income--that threshold is being raised to ~$20,000. This means that you will be taxed on ~$15,400 less income assuming you make $20,000 or more.
Overall, 67% of people in Alabama will pay the same or less in state income taxes.
What They Say:
2) Property Taxes will now be calculated based on 100% of market value rather than the 10% of market value that was used previously. Even though the State millage rate will be dropped from 6.5mills (.65%) to 3.5mills (.35%), and the homestead exemption for property you actually live on will increase from $4000 to $50,000, the NET EFFECT: If your home is worth more than $52,280, you will see a tax INCREASE.
Approximate rates: Home value: $60,000 - 32% increased property tax.
$80,000 - 57%
$100,000 - 66%
$150,000 - 73%
$250,000 - 78%
****These figures reflect the effect on the combination of your STATE and LOCAL Property Tax. The INCREASE of the STATE portion of the PROPERTY TAX is approximately 500% (5x's what you previously paid).
The Truth:
STATE property taxes will now be assessed at 100% of market value and 3.5 mills—but your LOCAL property taxes will remain the same. LOCAL property taxes will still be assessed at 10% of market value and will keep the same tax rate.
Your state property taxes are a very small portion of your overall property tax bill and it is only the state portion that is changing. The numbers that the author of the original email has included are a gross distortion of the truth.
The Alabama Department of Finance has quoted the following percentages:
If you own a $60,000 home, the average increase is 12%, not 32% (less than $2 more per month at full implementation)
$80,000: 29%, not 57% (about $7 more per month at full implementation)
$100,000: 35%, not 66% (about $11 more per month at full implementation)
$150,000: 35%, not 73% (about $23 more per month at full implementation)
$250,000: 42%, not 78% (about $47 more per month at full implementation)
When the Plan for Progress passes, your property taxes will still be lower than every state around us, will still be less than half the national average, and will be 70% of the southeastern average.
What They Say:
3) "Alabamians over the age of 65 will be completely exempt from STATE property tax on their homes." Watch the language here. They will still pay the LOCAL taxes which is around 28mils.
The Truth:
Local taxes on homes will not be changed under this plan. All of the increase is on the state portion, which means that seniors will not pay one penny more in property tax on their homes. In addition, seniors are exempt from state income taxes on much of their pension income. All of these exemptions will be protected under this plan, and for the first time, the first $40,000 of pension income from IRAs, 401Ks, 403bs, 457s, and similar plans will be completely exempt from state income taxes. This will give Alabama one of the most senior-friendly tax systems in the country.
The plan also secures and stabilizes funding for important senior services such as funding for senior centers and meals for the elderly.
Consider the senior groups that have endorsed the Plan for Progress: Silver Haired Legislature, State Department for Senior Services, CASA (Care Assurance Systems for the Aging) of Marshall County.
What They Say:
4) A 4% state tax will be added to SERVICE charges. In other words, whenever you have any home repair, an oil change, a haircut, etc., it will cost you an additional $40 for every $1000 worth of service (they include the labor in this calculation too).
The Truth:
Based on the estimates provided by the Legislative Fiscal Office, the average Alabamian will pay about $25 per year in sales tax on services. This is a tax that is common in other states (Florida, Tennessee, and Mississippi all already tax these services). Furthermore, haircuts will not be taxed, nor will things like roof repair or installation of a new floor in your home.
Remember that the tax on services is a very small tax that pales in comparison to the income tax breaks most Alabamians will receive under this plan.
What They Say:
5) The increased taxes for ownership of timberland will be passed on to those who lease the land (i.e.. cost for HUNTERS will significantly increase -estimated 5X increase in club membership > cost).
The Truth:
If the Plan for Progress passes, average taxes for timberland will still be relatively low compared to the regional average. Property taxes are only a small component of the overall expenses of hunting clubs. It is unlikely that the cost of club membership will increase much if at all.
What They Say:
6) Increased taxes on businesses will also be passed on to the consumer (you and me).
The Truth:
The plan will create greater equity in the way that businesses are taxed in Alabama. Some businesses have received unfair tax breaks for far too long and will be forced to pay their fair share. Other businesses will watch their taxes increase slightly.
Changes in insurance and bank taxes are not likely to have a significant impact on customer fees. Businesses or individuals that claim otherwise are simply trying to scare you into letting them keep their huge tax breaks.
What They Say:
7) A number of economic experts have estimated that 24,000 - 28,000 JOBS will be LOST in Alabama due to increased tax load on employers. They also expect a 3 billion dollar loss in capital investments in Alabama due to the unfriendly business climate resulting from increased tax load.
The Truth:
A recent report by Carl Ferguson, Director of the Center for Business and Economic Research at the University of Alabama, has completely refuted the study referenced above. You can see his comments about this report at:
http://www.abetteralabama.org/plan/paper1_071703.shtmlIn addition, the Center for Business and Economic Research just released a new study that shows the state will actually GAIN over 10,000 jobs under the Plan for Progress! This study is available at
http://cber.cba.ua.edu/.The key to economic success is developing a highly skilled workforce to attract higher paying jobs and industries. Other states that have invested in education in a manner like the Plan for Progress (North Carolina and Texas) have seen dramatic increases in personal income, industrial recruitment, and educational achievement.
Consider this list of business groups that have endorsed the Plan for Progress: Alabama REALTORS Association, Alabama Retail Association, Association of Builders and Contractors of Alabama, Birmingham Regional Chamber of Commerce, Business Council of Alabama, Chamber of Commerce Association, Huntsville/Madison County Chamber of Commerce, Mobile Chamber of Commerce, Montgomery Area Chamber of Commerce, etc.
These groups would never support a plan that would hurt Alabama's economy.
What They Say:
8) Governor Riley claims to be facing a $675-million deficit in available finances, yet this additional tax burden on the citizens is estimated to collect at least 1.2 billion dollars in revenue. Why the surplus?
The Truth:
Governor Riley could not, in good conscience, tell the people of Alabama that he was going to raise $675 million dollars in additional revenue and promise them more of the same. He knows that it is finally time to do something different in Montgomery so that we no longer have to be ranked at the bottom for all indicators of quality of life.
The plan will create stronger accountability measures that make pass-through pork a criminal offense along with scores of other accountability measures that will allow our existing and new tax dollars to be used more effectively.
The additional revenue will allow the state to invest strategically in proven programs such as the Alabama Reading Initiative, and a College Scholarship Plan and all are good for our children.
Consider the children’s groups that have endorsed the Plan for Progress: Children First Foundation, Children’s Aid Society, Children’s Trust Fund, Federation of Child Care Centers of Alabama (FOCAL), Kid One Transport, Save Kids of Incarcerated Parents, Inc. (SKIP), and VOICES for Alabama’s Children.
What They Say:
9) Governor Riley says he is going to "Un-Earmark all new tax revenue". Is this the accountability he promised us? Do you know who will be controlling this money? We'll save this topic for subsequent e-mails.
The Truth :
All of the revenue that is currently raised and earmarked will REMAIN earmarked. All of the additional revenue raised by this plan will go into a third fund called the Alabama Excellence Initiative Fund. This fund will be reserved for targeted investments in critical state services. All money that goes into this fund must be reappropriated and rejustified every year so that the people of Alabama can see every dollar that goes in and exactly how every dollar is spent. This new fund will provide the flexibility to direct funds where they are most needed each year. Most of this money will go directly toward education.
Consider the Education groups that have endorsed the Plan for Progress: A+ Education Foundation, Alabama Association of School Boards, Alabama Association for Supervision & Curriculum Development, Alabama Association of Elementary School Administrators, Alabama Association of School Administrators, Alabama Association of Licensed Early Care Educators, Alabama Association of Middle Level Administrators, Alabama Association of Secondary School Principals, Alabama College System President’s Association, Alabama Council of University Faculty Presidents, Alabama Department of Postsecondary Education, Alabama Department of Education, Alabama Education Association, Alabama Education Retirees Association, Alabama High School Athletics Association, Alabama PTA, Council for Leaders in Alabama Schools, Higher Education Partnership
What They Say:
10) Let Mr. Riley know that we expect him to TAKE THE TIME to get this right, not to ruin our State with an ill-conceived quick fix.
The Truth :
Our state has suffered for too long to wait any longer.
Alabama is constitutionally required to balance its budget. We have to fill the $675 million hole by Oct. 1. If Amendment One does not pass, we will have devastating cuts in some of Alabama’s most critical services including child protective services, senior services, our force of state troopers, and much more.
Summary of the Truth:
This reform plan represents a sound investment in Alabama’s future: We can create a state where our children get the skills to compete for good jobs, and where they have a better opportunity to live and raise a family. Alabama’s tax system will be fair and taxes will continue to be among the lowest in the country while fundamentally changing Alabama government.
By demanding accountability and investing in our future we can all come together for a better Alabama.
For more info, please visit www.abetteralabama.org or call toll free (866) 973-3676.
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