Category: Blog

Arise 2020: End Alabama’s state grocery tax and protect school funding

By Carol Gundlach

The Bible says that “to everything there is a season.” And we’re increasingly optimistic that the season has finally arrived for real tax reform in Alabama.

For more than a decade, Alabama Arise has worked to end the state’s 4% sales tax on groceries. It’s a regressive, punitive tax that costs struggling Alabamians the equivalent of two weeks’ worth of groceries each year. Legislation to untax groceries passed the House in 2008 but came up one vote short in the Senate. Arise has supported similar legislation in the years since, but it hasn’t come that close to passage again.

So why wouldn’t the Legislature cut the state sales tax on groceries? Ending a regressive and unpopular tax would seem to be an easy lift for even the most skeptical legislator. And that would be true if the vote were simply to end the state grocery tax.

But eliminating the tax without replacement revenue would strip $480 million out of the Education Trust Fund (ETF) budget. It would be irresponsible to take that much funding away from public schools, especially given Alabama’s history of underfunding education. Whether and how to replace that revenue has been a sticking point in the grocery tax debate.

How to untax groceries without costing education a dime

It’s crucial to replace the grocery tax revenue without hurting the people who would benefit most from the tax’s elimination. Fortunately, Alabama has a way to untax groceries while protecting both struggling families and education funding.

That solution would be to end an unusual tax loophole that primarily benefits the richest Alabamians: the federal income tax (FIT) deduction. This loophole allows people to deduct their federal income tax payments on their state income taxes. Because wealthy people pay more in federal income taxes on average, 80% of the FIT deduction’s benefit goes to the top 20% of taxpayers in Alabama.

The FIT deduction is a skewed tax break for rich households. And it’s one big reason Alabama’s tax system is upside down. For those who earn $30,000 a year, the deduction saves them about $27 on average. But for the top 1% of taxpayers, the FIT break is worth an average of more than $11,000 a year.

Most Alabamians would get a tax cut from untaxing groceries and ending the FIT deduction. Here is the estimated net tax change as a share of income if Alabama eliminated its federal income tax deduction and state sales tax on groceries. Bottom 20%: -2.78%. Next 20%: -1.21%. Next 20%: -0.9%. Next 20%: -0.47%. Next 15%: 0.04%. Next 4%: 0.49%. Top 1%: 0.95%.

Only two other states offer a full FIT deduction like Alabama does.  (Three other states offer a partial deduction.) Ending the FIT deduction would bring an additional $782 million a year into the education budget, according to the Institute on Taxation and Economic Policy. (Ending the FIT deduction on corporate income taxes would raise another $100 million or so.) That would be more than enough to remove the state sales tax on groceries without hurting public schools. And for a large majority of Alabamians, the net result would be a tax cut.

Legislators also are exploring the idea of untaxing groceries and replacing the revenue by capping the FIT deduction. SB 144, sponsored by Sen. Andrew Jones, R-Centre, would end the state grocery tax and limit the FIT deduction to $6,000 for individuals and $12,000 for couples. The bill wouldn’t raise additional money for education, but it would cover the cost of untaxing groceries.

Most Alabamians would get a tax cut from untaxing groceries and capping the FIT deduction. Here is the estimated net tax change as a share of income if Alabama capped its federal income tax deduction at $6,000 for a single tax filer and $12,000 for a couple filing jointly. Bottom 20%: -2.81%. Next 20%: -1.31%. Next 20%: -1%. Next 20%: -0.62%. Next 4%: 0.31%. Top 1%: 0.93%.

You can help end the grocery tax this year

We’re seeing promising signs that 2020 could be the year the Legislature finally ends the state grocery tax. After passing an unpopular gas tax increase in 2019, some key legislators have been talking about giving a tax break to families hit hardest by higher transportation costs.

Arise has met with many legislators in recent months to discuss the importance of taking the state sales tax off groceries. We’ve found widespread agreement that the time is right to make that happen. And many legislators are finally willing to consider closing the unfair loophole that the FIT deduction opened up in our income tax system.

We need you with us as we work to untax groceries and protect education funding in Alabama. Please join Alabama Arise or renew your membership today to add your voice to our chorus for change. Together, we can build a better Alabama!

Updated March 10, 2020.

Arise 2020: Expand Medicaid to save lives and make Alabama healthier

By Jim Carnes

Happy anniversary – not! 2020 marks the 10th year of Medicaid expansion under the Affordable Care Act, but not in Alabama. We’re one of just 14 states that have rejected federal funding to extend affordable health coverage to adults with low incomes. And soon, Kansas may cut that number to 13.

The stakes have only gotten higher as time has passed. Over the last 10 years, Alabama has:

  • Seen 13 hospital closures, including seven rural ones.
  • Given up more than $1 billion a year in federal Medicaid funding.
  • Forfeited a similar amount in related economic activity.
  • Allowed thousands of preventable deaths.
  • Stranded more than 220,000 Alabamians in the coverage gap, unable to qualify for Medicaid or afford private coverage.
  • Left tens of thousands more struggling to pay for health insurance they can barely afford.

After a decade of missed opportunity, Alabama needs to invest in our people and our future. Uninsured working parents, caregivers, veterans, people awaiting disability determinations, adult students and other Alabamians with low wages are putting off needed health care. Nearly 90% of our rural hospitals are operating in the red. People and communities across our state are suffering unnecessarily, and it’s time to do something about it.

What will it take to move Alabama forward? 

This can and should be the year for Medicaid expansion in Alabama. It’s an overdue move that would bring our federal tax dollars home to stabilize our rural hospitals and clinics. It would provide critical investment in local economies. And it would increase economic security for struggling Alabamians.

Success would not require passing a bill. Gov. Kay Ivey could simply request a Medicaid rule change raising the eligibility limit for adults, including those without children. A legislative panel that reviews rule changes could allow Medicaid to seek permission from Washington. If that gets the OK, Medicaid would simply factor expansion costs into its next annual budget.

Arise members have identified Medicaid expansion as a top priority. It’s the single biggest step Alabama could take to make life better for people with low incomes. And we’re working hard to make it happen.

We need you with us as we work to make Medicaid expansion a reality in our state. Please join Alabama Arise or renew your membership today to add your voice to our chorus for change. Together, we can build a better Alabama!

Arise 2020: Fight harmful proposals to cut Medicaid, SNAP and TANF

By Carol Gundlach

Safety net programs are designed to protect us when times get tough. But a recent wave of legislative and administrative attacks to those programs has threatened vital food and health assistance for millions of families across Alabama and the nation.

The stakes are high for people who struggle to make ends meet. Medicaid is a health care lifeline for one in four Alabamians. The Supplemental Nutrition Assistance Program (SNAP) helps one in six Alabamians keep food on the table. The Temporary Assistance for Needy Families (TANF) program provides meager but essential cash assistance for thousands of parents living in deep poverty.

All of these services improve lives. But numerous legislative plans could erect harmful barriers that keep struggling Alabamians from getting the help they need to survive.

Alabama Arise’s new fact sheet explains some of the harmful safety net proposals we may see this year. Arise members have helped defeat many of these proposals in the past. In 2020, we’ll need your help to do it again.

We need you with us as we work to defend programs that struggling people use in our state. Please join Alabama Arise or renew your membership today to add your voice to our chorus for change. Together, we can build a better Alabama!

Arise 2020: Why Alabama should fund public transportation

By Dev Wakeley

Public transportation is vital infrastructure for a state looking toward the future. It allows people who lack other transportation options – including seniors, people with disabilities, and people who can’t afford a car – to get to work, go to the doctor and meet other basic needs. Reliable public transportation strengthens communities and makes a state more attractive to employers.

Alabama can expand its public transit options with a General Fund appropriation for the Public Transportation Trust Fund. Even a modest state investment in public transit could have a big impact, as Alabama Arise’s fact sheet explains. With a state allocation of just $10 million, for example, Alabama could receive up to $40 million in federal matching grants in return.

Public transportation funding would be an investment in our state’s economy and quality of life. Alabama could create public transit options in rural and suburban areas where they don’t exist now. Existing services could run later and more often. And all of these investments would support hundreds of stable, good-paying jobs.

We need you with us as we make the case for public transportation funding during the 2020 legislative session. Please join Arise or renew your membership today to add your voice to our chorus for change. Together, we can build a better Alabama!

Arise 2020: Break down barriers to voting rights in Alabama

By Dev Wakeley

Voting is an essential tool for people to speak out about the future they want. By breaking down barriers to voting, we promote greater civic engagement. And we make it easier for folks to make their voices heard about issues that matter in their communities.

Alabama’s sad history of racist voting restrictions means our state has an ongoing moral obligation to strengthen voting rights. And our elected officials have numerous policy options to remove harmful barriers to voting.

One important step would be to ensure that people who struggle to make ends meet aren’t denied the right to vote simply because they can’t afford to pay court fines and fees. Another would be to streamline Alabama’s voting system by enacting automatic voter registration (AVR), which would use information the state already has to register or update registrations electronically for hundreds of thousands of Alabamians.

These policy changes would strengthen our state’s democracy by extending voting access to hundreds of thousands more Alabamians. That would promote higher civic participation and stronger community involvement. And it would make our society more just and inclusive.

We need you with us as we work to protect and strengthen the right to vote in our state. Please join Alabama Arise or renew your membership today to add your voice to our chorus for change. Together, we can build a better Alabama!

Arise 2020: Stop criminal justice debt from putting thousands of lives on hold

By Dev Wakeley

Criminal justice debt shouldn’t prevent a person from building a stable, secure life. But Alabama imposes millions of dollars in fines every year without considering a person’s ability to pay them. The state also conditions many rights and privileges, often including voting rights restoration, on whether a person has repaid fines.

Further, despite a prohibition on “debtors’ prisons,” thousands of Alabamians are at risk of going to jail or are driven further into poverty because they can’t afford to pay costs attached to the criminal justice system. And Alabama authorities routinely use civil asset forfeiture to take property from people without even proving they committed a crime.

Alabama can build a justice system that doesn’t rely on overly punitive fines. We can build a system that doesn’t make people with low incomes pay for the actions the state takes against them. We can build a system that doesn’t take people’s property without criminal convictions.

Our fact sheet shows a better path forward. My colleague Carol Gundlach and I examine numerous reforms that Alabama could make to end abusive criminal justice debt practices and make the state’s actions fit basic ideas of fairness.

We need you with us as we push for needed reforms to Alabama’s criminal justice system. Please join Alabama Arise or renew your membership today to add your voice to our chorus for change. Together, we can build a better Alabama!

Arise 2020: End the injustices in Alabama’s death penalty system

By Dev Wakeley

All Alabamians deserve equal justice under the law. But bias and inequality persist in Alabama’s capital punishment system, despite recent reforms.

Even though the state finally outlawed judicial override in 2017, the ban did not apply retroactively. That means dozens of people who were sentenced to death despite a jury’s sentencing recommendation of life without parole remain on death row.

Alabama can and must do better than this deeply flawed system. Our fact sheet sets out numerous important reforms to make Alabama law consistent with federal requirements and recent national trends. These changes would help reduce racial bias and bring Alabama’s capital punishment practices more in line with those in other states.

We need you with us as we push for needed reforms to Alabama’s criminal justice system. Please join Alabama Arise or renew your membership today to add your voice to our chorus for change. Together, we can build a better Alabama!

Arise 2020: Stop the debt trap for Alabama payday borrowers

By Dev Wakeley

A small loan shouldn’t be a sentence to months or years of deep debt. Everyone who needs to borrow money should have a reasonable pathway to repaying a loan without excessive costs. But in Alabama, high-cost payday loans cost struggling people tens of millions of dollars every year.

As our recent report with Alabama Appleseed shows, the industry profits off financial desperation. Two-week payday loans with annual percentage rates of up to 456% (not a misprint, unfortunately) trap many Alabamians in debt cycles they cannot escape. And Alabama’s lack of consumer protections gives those borrowers no reasonable path out of that debt trap.

There’s a better way. Alabama Arise supports 30 Days to Pay legislation to help the people injured most by these harmful practices. This proposal would give borrowers 30 days to repay payday loans, putting them on a cycle similar to other bills.

This change would make life better for thousands of Alabamians. About one in four Alabama payday borrowers take out more than 12 loans per year. Because the loans are so short in duration – as few as 10 days – these repeat borrowers pay nearly half of all payday loan fees assessed across the state. The 30 Days to Pay plan would give these borrowers a little breathing room to avoid spiraling into deep debt.

We need you with us as we push for common-sense changes to protect borrowers. Please join Arise or renew your membership today to add your voice to our chorus for change. Together, we can build a better Alabama!

Spread the word about our 2020 blueprint for change!

By Presdelane Harris

Alabama’s 2020 legislative session starts Feb. 4, 2020, and Alabama Arise is excited to keep working to make life better for people across our state. We think Medicaid expansion, untaxing groceries and our other priority issues offer a blueprint for real change in Alabama.

You can help spread the word and build support for these changes. So consider hosting a meeting in your area to inform people and equip them to make a difference in 2020. Our organizers can help folks feel more at ease talking to elected officials. And they have lots of valuable information about issues in our communities and our state.

Contact the organizer for your area or email me at pres@alarise.org if you or your group want to host a meeting. The session starts soon, so take advantage of this opportunity today. Together, we can build a better Alabama for all!

PS: Save the date! Arise’s Legislative Day is Feb. 25, 2020, in Montgomery.

To whom much is given, much is expected

By Alabama Arise

Guest post by Judy Taylor.

My name is Judy Taylor. I’m proud to serve on Alabama Arise’s board of directors and to count myself as an Arise member and supporter. And I urge you to join me in supporting Arise’s work to help struggling Alabamians through better public policies.

Grant funding will match up to $75,000 of donations that Arise receives by Dec. 31 dollar-for-dollar. This money will help strengthen Arise’s analysis, organizing and advocacy on important issues like Medicaid expansion and public transportation.

Generous supporters like you have already given $23,000 toward our $75,000 goal. With your help, we can reach that goal together.

Please donate today to support Arise’s work for change. If you’ve already given, I thank you for being part of our movement.

Why I support Alabama Arise

I support Arise because I experienced firsthand the struggle of a working family who faced economic challenges. Thanks to the GI Bill, my father had a good job as an electrical engineer. But we still faced challenges living a modest life.

As the oldest of 11 children, I remember the pain of wearing hand-me-downs, of carrying a buttered biscuit for lunch, of not being able to afford a 10-cent ice cream sandwich. But even then, I realized I was blessed with a good family, with loving parents who provided a home, food and clothes – more than others around me enjoyed.

As an adult, I try to live by Luke 12:48: “For unto whomsoever much is given, of him shall be much required.” This leads me to give my time, my talents and my money to support Arise in the fight against poverty and its terrible consequences.

Your support for Alabama Arise is an investment in a brighter future for all Alabamians. Please click here to contribute to Arise’s work today. Together, we can make Alabama better!