Ending the state sales tax on groceries is one of the top goals on Alabama Arise’s 2020 legislative agenda. Nearly 200 Arise members picked the organization’s issue priorities at its annual meeting Saturday in Montgomery. The seven issues chosen were:
- Tax reform, including untaxing groceries and ending the state’s upside-down deduction for federal income taxes, which overwhelmingly benefits rich households.
- Adequate budgets for human services like education, health care and child care, including Medicaid expansion and investment in home visiting services for parents of young children.
- Voting rights, including creation of automatic universal voter registration and removal of barriers to voting rights restoration for disenfranchised Alabamians.
- Payday and title lending reform to protect consumers from getting trapped in deep debt.
- Criminal justice debt reform, including changes related to cash bail and civil asset forfeiture.
- Death penalty reform, including a moratorium on executions.
- Public transportation, including state investment in the Public Transportation Trust Fund.
“We believe in dignity, equity and justice for all Alabamians,” Alabama Arise executive director Robyn Hyden said. “And we believe our 2020 issue priorities would break down policy barriers that keep people in poverty. We must build a more inclusive future where everyone can prosper.”
Why Alabama should untax groceries
The state grocery tax is particularly harmful for Alabamians who struggle to make ends meet. The tax adds hundreds of dollars a year to the cost of a basic necessity. And most states have abandoned it: Alabama is one of only three states with no sales tax break on groceries.
Alabama is also one of only three states with a full income tax deduction for federal income taxes (FIT). 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. Ending the FIT deduction would allow Alabama to remove the sales tax on groceries and still have funding left over to address other critical needs.
The grocery tax and FIT deduction are two key factors behind Alabama’s upside-down tax system. On average, Alabamians with low and moderate incomes must pay twice as much of what they make in state and local taxes as the richest households do.
“By untaxing groceries and ending the FIT deduction, lawmakers can make Alabama’s tax system more equitable for everyone,” Hyden said. “They can strengthen state support for K-12 and higher education. And they can make it easier for struggling families to put food on the table. This is an opportunity to make life better for everyone in our state, and the Legislature should do it.”