Taxing Issues: Geography, Politics and the 2003 Tax Reform Referendum in Alabama
Webster, Gerald R., Webster, Roberta H., Southeastern Geographer
In 2002, conservative Republican Bob Riley was elected governor of Alabama on a platform of cutting spending and freezing taxes. But within weeks of taking office, Riley proposed a tax reform package which promised to increase the state's tax receipts and reduce its tax code's highly regressive character. The tax reform package was submitted to the voters in September 2003, and rejected by more than a two to one margin. This article examines the electoral politics and geography of Riley's efforts to reform Alabama's tax system including the spatial pattern of voting on the reform pack age. It finds that Riley's political base of Christian conservatives was substantially responsible for the reform package's defeat. Conversely, those counties providing a majority of their support for the Governor's effort were nearly all substantially African American, and had voted for Riley's opponent in the 2002 gubernatorial election.
KEY WORDS: tax reform, electoral geography, Alabama
Alabama has one of the most antiquated tax systems among all states in the United States. A recent comparative analysis of all state tax codes awarded Alabama's system of taxation "F's" for its "adequacy of revenue" and "fairness to taxpayers" (Governing 2003, 38). Due to the political power of large land-holding interests in the state, Alabama has the lowest per capita property tax assessments in the nation. But nearly half of the state's counties have combined state and local sales taxes above 9%, with some locations levying sales taxes as high as 11% (Hamill 2002, 83-85). Alabama's sales taxes are particularly burdensome upon the poor because they are levied on food purchases. The state's income tax has an equally egregious effect upon the poor due to the minimum threshold used for its assessment. In Alabama a family of four pays income tax when its income exceeds $4,600. Notably, the federal government defines the poverty level as $18,400 for a family of four (Birmingham News 2003c, 10).
Income and sales tax collections are frequently subject to substantial volatility due to fluctuations in the national economy. As a result of Alabama's disproportionate reliance upon sales and income tax receipts to support the functions of its state and local governments, the development of reliable budgets is difficult. The state has ordered mid-year cuts called "proration" in ongoing budgets fourteen times in the past 50 yr when incoming tax receipts fell below those predicted (Birmingham News 2003a, 5). In the 2000-2001 fiscal year, for example, public education suffered a 6.2% cut in an already lean annual budget half way through the school year (Tuscaloosa News 2004).
Alabama ranked 45th among the states in terms of the proportion of its per capita income collected as state and local taxes in 2002 (Tax Foundation 2003). Due to the deductibility of federal taxes from state taxes provided for in the Alabama tax code, the state falls to 49th when the combined effects of federal, state and local taxes are considered. Similarly, if one considers states in the South for a comparison, Alabama has the lowest per capita state and local tax burden among eleven of its neighbors. In 2002, Alabama's tax system raised $2,117 per state resident compared to $2,841 in Georgia, $2,664 in North Carolina, $2,436 in Louisiana and $2,214 in Mississippi (Public Affairs Research Council of Alabama 2003). Thus, Alabama's tax system commonly fails to collect sufficient revenues to meet the state's minimum needs, places a disproportionate tax burden on low income citizens, and its receipts are characterized by volatility given its disproportionate dependence upon revenues generated from economically sensitive sales and income taxes.
Due to the politically sensitive character of tax reform in Alabama, the state's political leaders have generally avoided attempts to correct problems in the tax code. But in 2003, Republican Governor Bob Riley attempted to enact Amendment 1, the most sweeping reform of the state's tax code in Alabama's history. …