Alabamians below the federal poverty line should not pay income taxes.

In spite of the fact that almost 20 percent of Alabama’s population falls below the poverty level, Alabama taxes the poor more aggressively than any state in the nation.

We shouldn’t do that to the poor among us, and it doesn’t even make sense as a matter of public policy.

A 2014 report from the National Center for Children in Poverty notes that an Alabama family of four at the poverty level ($23,624) with two children has an income tax liability of $588. That is almost three times the burden placed on a family in poverty in Georgia and about four times the burden of Mississippi.

According to the report:

A married family with two children living in Alabama begins paying state income tax once its income exceeds $12,550, or 54 percent of the [federal poverty] threshold.

No, I haven’t lost my mind and become a bleeding heart liberal. I simply agree with Ronald Reagan’s ideas on the subject.

In his 1985 State of the Union address, Ronald Reagan highlighted the moral and economic import of supporting impoverished Americans. “To encourage opportunity and jobs rather than dependency and welfare,” he said, “we will propose that individuals living at or near the poverty line be totally exempt from federal income tax.”

Lower-income individuals and families spend most of what they earn on essentials such as food, clothing and housing. At or below the federal poverty level, taxes simply reduce the amount of money the poor have available for those necessities. Conservative voters looking to lessen public dependency on social welfare programs might want to start by enabling the poor to keep more of their money in the first place.

There is no better incentive for hard work than letting people keep more of what they earn.

We also know that the poor spend much of their income locally because of how they spend it. By eliminating income tax on the poor, we allocate dollars where they are needed more efficiently than any government program ever could.

In short, the social and economic cost of taxing the poor might actually be higher than the dollar value of the revenues the state is collecting from them.

Allowing Alabamians to keep more of their hard-earned dollars has been a constant talking point for the state’s conservative political leadership. It makes even more sense when applied to the poor.

Shielding working Alabamians at or below the federal poverty from the state’s income tax rewards those attempting to move out of poverty and may give them the economic breathing room they need to take the next step.

It is time for Alabama to consider Reagan’s wisdom and give Alabama’s working poor a break…an income tax break.

Featured Publications