THE
PARCA REPORTA Publication of the Public Affairs Research Council of Alabama/Number 42/Spring 2001
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THE
PARCA REPORT |
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A Publication of the Public Affairs Research Council of Alabama/Number 42/Spring 2001 |
How Alabama's Taxes Compare
States and local governments levy taxes to provide services for general benefit, such as schools, colleges, universities, roads, and protection of public safety and health. Public confidence in government necessarily begins with confidence in the tax system that finances it. In Alabama, three tax issues stand out:
 | Fairness. Taxes are compulsory payments for government services. Nothing is more important to good government than the fair distribution of tax burdens. Is Alabama’s tax system fair to all taxpayers? |
| Efficiency. Taxpayers expect efficiency in the management of their tax dollars, so they can be used to greatest effect. Does Alabama’s tax system provide an efficient distribution of tax dollars? |
| Adequacy. The tax system must adequately fund the public services that are important to a state’s development. Does Alabama’s tax system provide adequate funding for essential public services? |
ADEQUACY
| Alabama’s Tax Revenue: Lowest in the U.S. |
The U.S. Census Bureau conducts a census of state and local government finances every five years. The most recent data, from fiscal 1997, show that tax revenues in Alabama were lower than in any other state – 68 percent of the national average, on a per-capita basis. Every state in the southeast had a large tax revenue advantage over Alabama, as shown in Chart 1.
The numbers in this chart eliminate population differences. If each state had the same population as Alabama but collected taxes at its own per capita rate, three of our neighbors (Florida, Georgia, and North Carolina) would have collected over $2 billion more than Alabama in 1997. Even Mississippi, which ranked 49th in per capita tax revenues, would have collected $525 million more than Alabama.
Put another way, even if Alabama’s state and local governments had collected 6.5 percent ($500 million) more in taxes during 1997, we still would have ranked below every other state in tax revenues per capita. State and local tax revenues are used in similar ways in each state: they finance education, roads, police and fire protection, and other services that are important to the quality of life and to economic development. Tax revenue gaps of this size with neighboring states inevitably affect the quality and quantity of public services that can be delivered. The low level of tax revenues is a major cause of the well-publicized shortages of prison guards, state troopers, child welfare workers, and school funds in Alabama.
| Why Alabama's Tax Revenues Are Lowest |
Small resource base. The common rationale for Alabama’s last-place ranking on tax revenues is, "We are a poor state." It is true that Alabama has fewer resources to tax than most states, but in fact six other states had smaller levels of taxable resources than Alabama in 1997. Every one of them collected more tax revenues per capita.
Chart 2 looks at the taxable resources available to state and local governments in southeastern states during 1997. The figures in the chart are based on the combined ability of persons and businesses to pay taxes, as measured by personal income, business profits, and related amounts, adjusted by the population. By this measure, Alabama's tax base in 1997 totaled just over $23,000 per capita, which was 79 percent of the U.S. average. Arkansas, Mississippi, and four other states had smaller tax bases, yet all of them collected more tax revenue than Alabama.
Low tax rate. The second reason for Alabama's low tax revenues is that we tax our resources at a low rate. The effective tax rate can be measured by dividing state and local tax collections by taxable resources, creating a broad index of the tax burden on people and businesses. Alabama ranked below all but seven other states on this measure, with an effective tax rate that was 86 percent of the U.S. average.
Chart 3 looks at the tax revenue that state and local governments in the southeast collect as a percent of the taxable resources shown in Chart 2. At 7.9 percent, Alabama’s tax rate ranked lower than all other southeastern states except Louisiana and Tennessee. However, these two states (and five others like them) had larger or broader tax bases that enabled them to collect more tax dollars per capita than Alabama.
What these data indicate is that Alabama generates the lowest per capita tax revenues in the U.S. because of its low tax rate as well as its small base of taxable resources. No other state among the fifty is below Alabama on both of the measures shown in Charts 2 and 3. Those that have smaller tax bases, like Arkansas and Mississippi, all have higher tax rates to generate a more adequate revenue total. Those that have lower tax rates, like Tennessee and Louisiana, all have larger tax bases that enable them to produce more revenue even at the lower rate. Alabama ranks at the bottom because it combines a small tax base and a low tax rate.
EFFICIENCY
Alabama’s tax structure is characterized by extremes which, taken together, create an environment that makes efficient management of tax dollars almost impossible. Not only are there fewer tax dollars available than in any other state, but the sources are unbalanced in a way that leads to fiscal instability. Flexibility at the state level is missing because of extensive earmarking. Schools and county governments lack a stable base of local funding that would enable them to be more effective.
| Imbalance Among Tax Sources |
All of Alabama’s taxes are not low. In terms of tax sources, Alabama stands out because of a lack of balance. Chart 4 shows the burden of sales, property, income, and other state/local taxes for southeastern states and the U.S. average. The burden is measured by dividing the tax revenues of each type by the taxable resources in the state.
Nationally there is rough balance among the three big tax sources, but most southeastern states are heavy on sales taxes and light on property taxes. Alabama is more than twenty percent above the U.S. average on the sales tax burden. Our income tax burden is about twenty percent below the U.S. average. Our property tax burden is lower than in any other state and more than sixty percent below the U.S. average. In other words, even if Alabama’s property tax revenue were doubled, the economic burden of the tax would be lower than the national average; in per capita terms, Alabama’s property tax revenue could be tripled without reaching the national average. (This does not mean that property taxes are equally low for every taxpayer, however, as the fairness discussion below makes clear.)
Many tax studies recommend balance among income, sales, and property taxes. One reason is that balance brings diversification and greater protection against economic downturns. Citing a recent academic study, fiscal expert John Petersen warned in the February 2001 issue of Governing Magazine that states are relying more and more on economically sensitive personal income and sales taxes. In addition, he pointed out, sales tax bases have been made less stable by exemptions. His advice: "broaden the base, keep the rate low and tax what your neighbors tax."
The validity of Petersen’s warning for Alabama is clear. State sales and income tax revenues in the current fiscal year are expected to fall below the appropriated level by more than $260 million, creating a major budget crisis.
| Earmarking of Most State Tax Revenues |
Because of the extensive earmarking of state tax revenues, the current budget crisis is focused on education. Seven out of every eight state tax dollars in Alabama are earmarked for specific purposes by the state constitution or statute, a higher percentage than in any other state. Most states earmark less than thirty percent of tax revenues, as shown in Chart 5.
Earmarking is widely considered appropriate when the tax is paid by those who benefit directly from its expenditure. Motor fuel and vehicle registration taxes, for example, are earmarked for highway programs in most states. In addition, the Alabama constitution earmarks almost all of the state income tax for public school teacher salaries, and state law earmarks most of the state sales tax for general educational purposes.
Earmarking these two broad-based sources of tax revenue for education channels most of the natural growth in state revenues to that purpose, but it also focuses the economic risk there. A mid-year education budget reduction, termed "proration," has occurred on average once in every four years during the last half-century. The state has never created a reserve fund to cushion this risk, nor does the tax system provide a stable local funding base for many school systems that would allow them to manage effectively a large, sudden reduction in state dollars.
| Vulnerability of Schools to Proration |
The vulnerability of local school systems to proration of the state budget has become apparent in the current fiscal year. The Governor has declared that state education revenues will fall 6.2 percent below the amount appropriated in the current fiscal year, triggering proration that started with March payments. Since this leaves only seven months to recoup the loss, the remaining monthly payments to education agencies must be reduced by 10.6 percent to balance the budget by the end of September.
State law says that public school employee salaries cannot be reduced through proration, and their fringe benefits are protected contractually. The cuts therefore must come from other operating accounts. Since salaries and fringe benefits typically consume eighty to ninety percent of school operating funds, the burden of proration falls on the remaining ten to twenty percent of a school system’s budget.
As a rough rule of thumb, then, a school system can expect an actual loss of buying power that is from five to ten times the stated rate of proration, in percentage terms.
The table below shows the impact on operating accounts of proration at percentages that range from two to ten (remember that the annual proration percentage must be increased to measure the monthly impact of a cutback that occurs in mid-year). Local funds or borrowing are the only sources of money to replace the loss of state dollars that occurs in proration.
The Attorney General recently agreed with the Governor that one way to exempt public school salaries from proration would be not to count them in calculating the proration percentage, which means reducing state funds to the public schools by 3.8 percent for the year, while higher education bears a reduction of 11.2 percent. This method is now being challenged in court. However, even with 3.8 percent proration (which results in a 6.5 percent cutback when spread over seven months), some local school systems will lose substantial percentages of all state and local operating funds for the remainder of the fiscal year, as shown in the table.
Chart 6 uses 1999 financial data to illustrate this point. The chart shows the percent of all state and local non-personnel operating expenditures that would be lost in six typical school systems, assuming 3.8 percent proration implemented in March (losses to specific school systems might be somewhat higher or lower, due to the many factors involved). The system on the left has a high level of local tax support and spends $7,000 per student; its loss would equal about a fourth of all state and local operating funds during the last seven months of the year. The average Alabama school system, which spent about $5,500 per student in 1999, would lose more than 45 percent of all state and local operating funds from March through September. The system on the far right, like Alabama’s poorest-funded school systems, has very little local support and spends only $4,500 per student. At 3.8 percent proration, it would lose almost sixty percent of all state and local operating funds during the last seven months of the year.
These percentages are far beyond what can be recouped through simple belt-tightening. For example, eliminating all travel and training for the entire fiscal year would reduce non-personnel operating expenditures in Alabama school systems by only two percent. The major purchases made with operating funds include utility services, books, classroom supplies, and building maintenance. All of these expenditures are important to schooling.
Thus, unless a school system has significant local funding or reserves, a large state budget correction in mid-year is very difficult to manage. The State Department of Education has reported that 49 of 128 school systems will have to borrow funds to continue operating through the end of the current year. A major reason for this is that the level of local tax support is too low, given the frequent proration of state income and sales tax dollars.
| Inadequate Local Funding Base |
The local support requirement. The State of Alabama requires that public schools receive ten mills of local property tax support, or the equivalent from other local sources. Ten mills is a tax burden of one percent on property value. However, property in Alabama is valued for tax purposes at ten to thirty percent of its market value, depending on its classification. Thus, the required local tax effort for public schools actually varies from 0.1 to 0.3 percent of property value, before exemptions.
When all four classes of property are considered together, the effective local tax rate required for public schools is 0.14 percent of total value, or 1.4 mills. (Taxpayers in 36 school systems pay only part of this requirement in school property taxes; these systems collect the rest from sales taxes or other equivalents.)
This requirement creates a local funding base of about $400 per student in the public schools of Alabama, which is less than $2.30 per student for each school day. The financial stability provided by such a local support requirement is minimal.
The impact of property classification. It is natural to assume that local support for Alabama’s public schools is low because the required tax rate is only ten mills. However, the property classification system that creates taxable values also has great impact.
Under the constitutionally mandated classification scheme, properties are taxed at different percentages of value. About 45 percent of all property value in the state is classified as residential or agricultural and taxed on ten percent of its value. Another 41 percent is classified as commercial and taxed on twenty percent of its value. Personal automobiles are taxed on fifteen percent and utility property on thirty percent of value.
Ten years ago the Alabama Commission on Tax and Fiscal Policy Reform recommended that all property be taxed on the same percentage of value. Assessing all property for school taxes at the same percentage of value would improve the local funding base in Alabama’s poorest school systems. The table below illustrates why this would occur. It shows five counties where more than sixty percent of all property value is classified as residential or agricultural and taxed on ten percent of value – the lowest valuation ratio created by the constitution. This is part of the reason why these counties produce very little local revenue for their schools.
On the other hand, the table also shows five counties where more than sixty percent of property is assessed at fifteen, twenty, or thirty percent of value for tax purposes. As this example illustrates, the classification system created by Alabama’s constitution widens differences in assessed property value among school systems, and therefore contributes to the gap between "rich" and "poor" school systems.
The gap would narrow if school taxes were based on the same percentage of value for all property. For example, if all property were assessed at twenty percent of value for school tax purposes, the tax base for schools in Lowndes County would increase by 55 percent, while it would increase by only seven percent in Washington County, based on figures from the Alabama Department of Revenue.
On a statewide basis, assessing all property at twenty percent of value for school taxes would produce about $150 million in additional local support for schools, assuming no change in tax rates.
The impact of constitutional limits on the taxing power of cities, counties, and school systems. Alabama’s constitution controls property taxation thoroughly but is silent on sales taxes. Cities, which have home-rule power to levy taxes except where specifically prohibited, have made sales taxes their primary source of revenue. An unfortunate side effect is that cities are discouraged from annexing residential development, which does not generate enough in property taxes to cover the cost of municipal services. Thus, a substantial amount of residential property development in Alabama is occurring outside city limits.
Cities are encouraged by the tax system to expand their commercial tax bases, which are taxed at twenty percent of value and also produce business license and sales tax revenue. In urban areas, this leads to tax competition for commercial development. In effect, the lack of balance in Alabama’s tax system is promoting urban sprawl – an inefficiency that brings large, but hidden, costs.
In most states, the property tax is the major source of local tax support for schools as well as community services in urban areas. There are at least three logical reasons for this. One is the stability of property tax revenue. A second is that high-quality schools and local services protect and enhance property values, making the tax payment an investment for the taxpayer. Thirdly, the visibility of the tax makes taxpayers aware of their stake in effective local services, which creates accountability within the community, where it is most effective. An argument can be made that the occupational taxes on personal income levied by some Alabama cities share these advantages, but it is clear that local sales taxes do not.
Counties and school systems are not able to get around the property tax limits as easily as cities do. Counties lack home-rule taxing power except for a sales tax for schools, while school boards depend on cities and counties to authorize or levy all of their local tax support. These arrangements leave many counties and school systems with an inadequate local financial base. The 1997 Census of Governments showed, for example, that counties in Mississippi receive about 25 percent more tax revenue than Alabama’s counties, on a per capita basis. Recent data from the National Education Association show that Georgia’s school systems receive twice as much local revenue per student as their counterparts in Alabama.
FAIRNESS
Alabama's tax burden is low, but the tax system is not characterized by broad-based, low-rate taxes that treat all taxpayers equally. Instead, taxpayers are often treated differently from one another, and these differences raise substantial fairness issues for both personal and business taxes.
| Too Many Exemptions |
Exemptions shield some, but not all, taxpayers from the full impact of the tax burden. An example is the homestead exemption on the state property tax, which exempts the first $40,000 of home value from taxation. Exemptions normally are enacted to promote fairness, but over time they tend to multiply and outlive their original rationale. When the major part of a tax base is shielded from taxation, then it can be argued that special interest rather than fairness is being served by the multiplicity of provisions involved.
Chart 7 shows the impact of exemptions, deductions, and other types of exclusions on property, sales, and personal income taxes in Alabama. They leave an effective property tax base that is only twelve percent of market value, and sales and personal income tax bases that are only half the value of all sales and income. The 1991 report of the Alabama Commission on Tax and Fiscal Policy Reform recommended that many of these exemptions be removed or limited to create broad-based, low-rate taxes on income, sales, and property.
| Differences in Property Valuation by Class |
Table 1, below, shows the impact of the different assessment percentages and exemptions on the state tax base in 1998, and the estimated effective tax rate on the market value of property in each class. The table also shows the maximum effective tax rate set by the constitution for each class of property. The data reflect PARCA calculations based on the annual property tax report of the Alabama Department of Revenue.
The data indicate that utility property totals five percent of the market value of all property in the state but pays eleven percent of all property taxes; its effective tax rate is twice the average for all property. Commercial property totals 41 percent of market value but pays 54 percent of all property taxes; its effective tax rate is almost a third higher than the average for all property. Homes and agricultural property total 45 percent of market value, pay 25 percent of all property taxes, and have an effective tax rate that is a little over half the average for all property. Automobiles make up nine percent of the market value of property, pay about ten percent of property taxes, and thus have an effective tax rate slightly higher than the average for all property.
One way to evaluate the fairness issue is to look at how property in these classes is taxed in other states. The best interstate comparison of property taxes is done by the Minnesota Taxpayers Association. It covers homestead, commercial, and industrial property. Chart 8 compares southeastern states and the U.S. average based on results from the most recent study. Alabama’s taxes on commercial and industrial property are low, but not the lowest in the southeast. On the other hand, homesteads are taxed far below the level of other states, and at one-third the U.S. average.
| Failure to Consider Intangible Property |
| High Tax Burden on Low-Income Families |
A number of southeastern states achieve a fairer distribution of the tax burden through personal exemptions to the state income tax. Chart 9 shows that in Mississippi, as in Alabama, a low-income family will pay a high sales tax burden; but Mississippi's income tax contains large personal exemptions that eliminate or reduce the tax on low-income families. The result is that in Mississippi the total state and local tax burden is somewhat smaller for the low-income family than for the high-income family. In Alabama, where the state income tax does not play such a balancing role, the reverse is true.
The Center on Budget and Policy Priorities reported in a recent study of state income taxes that Alabama has the highest income tax burden for low-income families among the 42 states with such a tax. A two-parent family of four, for example, begins paying Alabama income tax when earnings reach $4,600; in Mississippi, the income tax threshold for such a family is $19,600.
Improving the state income tax to promote tax fairness would not require reducing the revenue it produces, unless that is the intention of policy makers. Alabama’s income tax burden is twenty percent below the national average, as shown earlier, and it would be possible to increase fairness while either maintaining or raising revenue. Alabama’s two tax reform commissions in the early 1990’s recommended changes of this type to the state income tax; one would have been revenue-neutral, the other would have raised revenue. Additional proposals have been made in the years since, but none has been enacted into law.
| Business Tax Differences |
Alabama's business taxes are much more complex than taxes on individuals, and no simple fairness standard is available to integrate their impact on various kinds of companies. Within the business community, fairness issues often revolve around where companies are located for tax purposes. All states try to favor in-state companies at the expense of those headquartered out-of-state. Some progress has been made in removing such differences in Alabama. A successful lawsuit against the state franchise tax led to the elimination of differential treatment in that tax based on the state in which businesses file their papers. The reforms also extended the tax to a broader base of businesses and increased reliance on the corporate income tax, which better measures ability to pay.
Ironically, Alabama’s corporate income tax penalizes corporations that invest heavily in this state and use it as a base for their operations elsewhere. This occurs because Alabama has not kept pace with other states in apportioning corporate income for companies operating in multiple states. As a result, an Alabama-based corporation operating in other states often pays tax on more than 100 percent of its total income. This problem is discussed fully in a recent PARCA report titled Considering the Double-Weighted Sales Factor for Apportioning Business Income in Alabama, available on the PARCA web site.
EFFORTS AT TAX REFORM
In the early 1990s, two tax reform commissions were appointed to make recommendations for improving Alabama's tax system. While some of their proposals have been adopted, much remains to be done. The two studies remain viable as starting points for tax reform discussions today. Their recommendations are discussed below and summarized in the chart on the following page. In the chart, recommendations that have been adopted are italicized.
The Alabama Commission on Tax and Fiscal Policy Reform. The Legislature in 1990 created the Alabama Commission on Tax and Fiscal Policy Reform. The report of this commission, presented in 1991, recommended changes that would produce a broad-based, low-rate tax system that would be "capable of producing adequate revenues, in a fair way, and without compromising economic development in the state." The commission's recommendations included the following:
federal adjusted gross income. Such an income tax would be simpler, reducing the costs of compliance and administration. It would reduce the tax burden on low-income families, offsetting the regressive effect of Alabama's high sales taxes and producing a more even distribution of the tax burden across income levels. The rate would be reduced from the current maximum of five percent to about four percent for revenue neutrality.
with fewer exemptions. This would decrease the regressive nature of the sales tax, since higher-income taxpayers purchase more services. The statewide rate would be reduced from the current four percent to about 3 percent for revenue neutrality. Local taxes of up to 3 percent, using the state tax base, would be permitted.
assessed at 100 percent of value, with dramatically reduced tax rates. Intangible personal property owned by individuals would be taxed at one mill by the state only. A reformed version of "current use" assessment would be available for homes, farms, and timberland. Cities and counties would be able to authorize votes on property tax increases without legislative approval.
income, and a corporate franchise tax based on capital employed in Alabama by both corporations and limited partnerships. Reliance on the franchise tax would be reduced and the revenue replaced by eliminating the federal income tax deduction from the corporate income tax.
user taxes. Education would be defined as an essential function of state government, and all state functions would be subject to equal proration during budget shortfalls.
granted only after an independent cost-benefit analysis. School taxes could not be abated.
The Tax Reform Task Force. In October 1991 the Governor appointed a Tax Reform Task Force to formulate a plan for reforming the state's tax system and producing additional revenue for state services. The Task Force in its deliberations decided to develop accountability reforms for state government as well, on the premise that any increased funding must be accompanied by better performance and accountability. Among the Task Force recommendations:
-A personal income tax based on federal taxable
income with rates set at 4.6 percent on the first $35,000 of income and five percent on the remainder. This basis, while more progressive, would incorporate the deductions in the federal tax code.
-A sales tax expanded to include certain types of services. The rate would be kept at four percent, with the automobile rate increased from two to three percent.
-A corporate income tax of 6.5 percent with no federal income tax deduction, coupled with a reduced corporate franchise tax levied on the same basis for foreign and domestic corporations and limited partnerships.
-A change in utility taxes. Utility privilege license taxes would be repealed; utility gross receipts tax rates would be increased, and cable TV service would be included in the base.
-Higher property tax rates. The state tax would increase from 6.5 to fourteen mills, and a floor of twenty mills (increasing eventually to thirty) would be set for local school property taxes. All business property, including utility property, would be taxed at thirty percent of value, with the change phased-in so that no revenue loss would occur. Local taxing authorities would be allowed to call ad valorem tax referenda. Individuals would pay a state tax of one mill on intangible property.
-Limits on tax incentives, and required reporting of tax-exempt property.
-Accountability measures for state government, including strategic planning, performance-based budgeting, a quality improvement program, financial and operating reviews of agencies, and a cap on expenditure growth. Separate accountability measures were proposed for K-12 education and higher education.
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ABOUT THE DATAThe data in Chart 1 were derived from 1997 tax and population data available electronically from the U.S. Census Bureau. For each state, total state and local tax collections were divided by the state’s population to create a per-capita amount; this amount was then multiplied by Alabama’s population. For each state, the difference between this number and Alabama’s actual tax collections is shown in the chart.
The concept of taxable resources was developed by the U.S. Treasury Department. The data shown in Chart 2 were derived by PARCA staff to approximate the Treasury definition. For each state, PARCA obtained 1997 gross state product (GSP) data published by the U.S. Bureau of Economic Analysis, which include the earnings of businesses and individuals; personal contributions for social insurance were subtracted, because they are not taxable by states and localities. Certain other minor adjustments to GSP would improve the measurement of taxable resources, but the data are not available.
The data in Chart 3 were derived by PARCA staff, dividing the taxes in Chart 1 by the taxable resources in Chart 2. The resulting percentage is in effect the tax rate on resources available for state and local taxation, a broad definition of tax burden or effort.
The data in Chart 4 were derived by PARCA staff, dividing tax collections from each source by the taxable resources shown in Chart 2.
The earmarking percentages shown in Chart 5 were obtained from the web site of the National Conference of State Legislatures.
PARCA staff developed the data in Chart 6 by analyzing the 1999 financial statements of Alabama school systems. The percentages for school systems at each spending level are based on a regression analysis comparing proration loss to spending per student.
The property tax analysis in Table 1 and on pages 5-7 is based on PARCA analysis of the Alabama Department of Revenue Report, "Summary of Ad Valorem Tax Assessments, Oct. 1, 1997 Lien Date, Oct. 1, 1998 Collection Date." The first three columns of the table contain data from the report; PARCA staff used the constitutional assessment percentages to derive market values for each class from these data. The value for Class III property does not account for the impact of "current use" assessment and therefore is low by some unknown amount, which means that the effective tax rate is really lower than shown in the table; but there is no way to overcome this shortcoming in the data. PARCA staff used county-level taxable values by class to derive the statewide estimate of taxes paid by class, as shown in the table. This estimate was then compared with market value to derive an effective tax rate for each class. These same data allowed PARCA staff to estimate the impact of assessing all property by the same percentage of value.
The estimate of the taxable portion of the property tax base in Chart 7 was developed by dividing the taxable value of property by the market value, as shown in Table 1; the difference between these two figures is the value of all exemptions of one kind or another. For sales taxes, a similar comparison was developed from data in the Economic Census of 1997 and taxable sales as reported by the Center for Business and Economic Research at the University of Alabama. For the personal income tax, taxable income as reported by the Alabama Department of Revenue in its report "1997 Tax Year Statistics of Income" was compared with federal adjusted gross income as reported by the I.R.S. on its web site.
Chart 8 presents data from the Minnesota Taxpayers Association study, "50-State Property Tax Comparison Study," January 2001. The data shown are for typical rural areas in each state, and represent a $150,000 homestead, a $1-million commercial property, and a $1-million industrial facility.
Chart 9 was developed from data gathered by PARCA staff for the Tax Reform Task Force in 1992, using tax rates and tax forms applicable to the two localities compared. The family definitions are the same as those spelled out in PARCA Report No. 7, Considerations in Reforming Alabama's Taxes, Winter 1990.
The Center on Budget and Policy Priorities study of state income taxes mentioned in the text on page 8 is titled State Income Tax Burdens on Low-Income Families in 2000: Assessing the Burden and Opportunities for Relief
, by Robert Zahradnik, Nicolas Johnson, and Michael Mazerov; it is available on the Center’s web site (http://cbpp.org).The PARCA report Considering the Double-Weighted Sales Factor for Apportioning Business Income in Alabama, principal author of which is William A. Raabe, PhD, Professor of Business at Samford University, is available on the PARCA web site under "State and Local Taxes."
The discussion of recommendations made by the Alabama Commission on Tax and Fiscal Policy Reform and Tax Reform Task Force was based on their reports.