Taxes are the tools that Americans use to pay for education, public health, transportation and other elements of the common good. Just as states differ in the scale of services offered, they also differ on the ways to pay for those services. Some states lean on property taxes to fund public services, while others rely more on sales taxes or income taxes. Some states have only one or two of these basic taxes. Differences in the levels and kinds of taxation help determine how adequate a state’s revenues are and how equitably its tax system treats people across the income spectrum.
Partly by accident and partly by design, state taxes affect Alabamians differently than people almost everywhere else. This fact sheet will look at the various ways in which states collect revenue and examine some of the differences that place Alabama’s tax system out of line with the way most other states do things.