Despite large state budget surpluses, legislators should "think long and hard" about cutting taxes, according to Dr. David Bronner, Retirement Systems of Alabama's CEO.

Bronner wrote in a newsletter to the RSA's 380,000 members recently that "many years ago, a multi-billionaire caught me by surprise by telling me he did not care about paying reasonable taxes" and that "his point was that reasonable taxes on income were a lot better than not having an income."

"I urge our legislators to think long and hard about any tax reduction without a new source of revenue to replace that reduction," Bronner said. "We ALREADY have one of the lowest total taxes in the United States. Instead of considering more tax breaks, how about solving some of the problems of Alabama, like health insurance for 300,000 Alabamians, adequate staffing at our prisons and public safety, along with improving mental health facilities and education!"

Multiple legislators last year said the state should pursue some form of an income tax rebate or cut or eliminate the grocery tax due to large state budget surpluses and to help Alabamians with the rise in everyday expenses from inflation.

The Public Affairs Research Council of Alabama published a study in December stating that Alabama had the "second-lowest state and local tax collection per capita."

Other organizations have taken a much less rosy view of Alabama's tax burden.

Alabama has the worst tax climate for businesses in the Southeastern United States, according to the Tax Foundation's 2023 State Business Tax Climate Index.

The index ranked Alabama 41st overall nationwide for its business tax climate, dropping two spots since last year and finishing with the lowest score in the Southeast.

Alabama is in the top 20 in the nation when it comes to its corporate, property and unemployment insurance taxes. However, its ranking of 30th overall in individual income taxes and last in the country for its sales tax burden weigh down the other areas of the tax code.

According to the Alabama Department of Revenue, Alabama individual and married taxpayers pay a five percent income tax rate on taxable income over $3,000 and $6,000, respectively. There are exceptions for some types of income. Income from pensions such as those managed by the RSA is exempt from the state income tax in Alabama, according to AARP.

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