Birmingham Business Journal: Alabama tax system lands in ‘terrible 10’
media mentionJan 31, 2013, 2:21pm CST
Staff Birmingham Business Journal
Alabama has one of the nation’s 10 most regressive tax systems, according to a new report from the Institute on Taxation and Economic Policy.
The institute claims the lack of a graduated personal income tax and a reliance on sales and consumption taxes has created a regressive system in many states, including Alabama.
Alabama’s reliance on sales taxes, which a separate report from the Tax Foundation claims accounted for approximately 47.5 percent of the state’s tax revenue in 2010, contributed to the state’s low ranking.
According to the institute, the lowest 20 percent of earners in Alabama (those earning less than $16,000 per year) pay about 10.2 percent of their income in taxes. That’s compared to 3.8 percent for the top 1 percent of earners in the state (those earning more than $371,000).