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Alabama NewsAlabama Politics
Higher Taxes Without Greater Accountability
By Gary Palmer
Posted on: April 19, 2005
Now that most of us have dutifully filed our federal and state income tax returns, it might be interesting to get some insights that may help put our tax burden into perspective.
According to the Tax Foundation, a public policy research group, although Alabama has one of the lowest tax burdens in the country the average Alabamian worked 94 days last year, almost a quarter of the year, simply to pay their federal, state and local taxes.
To put this in context, the average American family worked 65 days last year to pay for housing and household expenses. They worked 31 days to pay for food and 13 days to pay for clothing and accessories. It took 52 days worth of work to pay for medical care, 31 days for transportation, and 22 days for recreation. All other non-tax expenses required 42 days of income, and only two days worth of income went into savings.
As you can see, Alabama taxpayers, like other Americans taxpayers, spend far more to pay their taxes than they do for any other category of expenses.
Still, Alabamians can consider themselves fortunate that they are giving less days of servitude to the government than the citizens of some states across the nation. Alabama's "Tax Freedom Day," the day that we stop working to pay the government's bills and start working for our own income, is April 4th of this year while Connecticut's is almost a full month later, falling on May 3rd. And Alabama's Tax Freedom Day is two weeks earlier than it was in 2001 when it fell on April 18th, an improvement due to the Bush Administration's tax cut packages of 2001-2002.
Tax Freedom Day for the whole country averages out to April 17th which is a substantial improvement over 2001 when people had to work until April 30th to pay their tax bills. Though many people don't stop to think about it, most Americans are working the first three and a half months of the year just to pay their taxes.
Given the enormous burden that this places on individuals and families, federal, state and local governments should exercise great care in the use of their taxing and spending power. As the 1884 Democratic Party platform stated, "Unnecessary taxation is unjust taxation." Consequently, no government official or politician should be allowed to waste the taxpayers' money on programs and activities that are inefficient, unneeded or outside the legitimate role of government. And no governing body should allow the pilfering of the public treasury by government officials and employees or by politicians.
Yet, even after the overwhelming defeat of the $1.2 billion tax increase, there is a constant refrain coming from various groups in Alabama calling for higher taxes. Higher taxes are going to be a hard sell to people that are already working the first 94 days of the year just to pay their taxes, 32 days of which are for the cost of state and local governments that have consistently abused the trust of Alabama taxpayers.
Real reform of our state government should make accountability its primary focus and start with cleaning up the budgeting process by requiring that every state agency be accountable for every dime they spend. This accountability measure can be implemented by making performance-based budgeting part of state law. The next step in restoring the public's trust is placing reasonable limits on the annual growth of state spending so that in years of surplus, such as this year, the politicians wouldn't be able to spend it all. Instead, they would be required to put money into a budget reserve account so that in lean years the state will have the ability to meet its budget needs.
The State Legislature should also make the limits on growth of state spending an option available to the taxpayers as an amendment to the state constitution and let the people vote on it.
In the overall scheme of reforming Alabama's tax code, it would be wise to follow the recommendations found in a recent issue brief from the Institute for Policy Innovation entitled "A Framework for Tax Reform."
The authors cite some sensible principles and attributes of a sound tax system that Alabamians should insist on in any discussion of tax reform. For instance, any change to the tax code should inflict as little harm as possible on the state's economy. This will require that the tax code be neutral in that it measures all income correctly to establish an appropriate tax base and then taxes that base with minimal disruption of economic activity.
There should also be transparency in the tax code so that it is clear to the taxpayers how much government costs and who is paying for it. Combined with performance-based budgets in which the objectives of state agencies are clearly defined and able to be measured to determine the agency's effectiveness in the use of taxpayer dollars, this would substantially improve accountability.
When Alabama taxpayers are working the first three months of the year just to pay the cost of federal, state and local government, the government should honor that sacrifice by being fully accountable for what they do with the people's money. Until they do, most Alabamians will continue to take a dim view of any call for higher taxes.
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