While some state officials argue for tax cuts in light of Alabama's $2.7 billion budget surplus, State Sen. Andrew Jones (R-Centre) is looking for relief elsewhere by eliminating occupational taxes.
Jones said support for his proposed bill, similar to the one that failed to pass last year, has been gaining support among legislators while being largely condemned by the mayors it would affect. That's why Jones told Phil Williams on Friday's episode of "Rightside Radio" that he is already considering a compromise to his original plan.
"We've kind of been debating about whether you go for the whole enchilada or whether you split down the middle and you do a 1% hard cap," he said. "… [A]nd then you also bar them from implementing any more [taxes] and increasing any more, which is kind of another loop whole that's in there."
Occupational taxes are local taxes individual workers and employees pay — via paycheck withholding — to operate within a municipality. Without the 1% cap, the plan is to phase them out by a tenth of a percent until it reaches zero, which would be up to 20 years for places with the highest rates, such as Gadsden at 2%.
"The tax is fundamentally unfair … on its face, but then to have a situation where somebody's not even working there, and they're still bearing the brunt of it is a whole other level of wrong," Jones said, referring to remote workers.
He said the tax could also have a negative impact on a city's economic development.
"Economic development is a game of inches sometimes," Jones said. "One little thing can make or break a deal… You think about it – your employees get 2% more take-home pay if you just go over the county line. So it's kind of a disincentive for smart businesses to locate in your area."
"There's just a lot of strange and peculiar things going on, and they need to be reigned in," he added. "It's kind of been seen as free money, 'It comes out of the paycheck, people won't miss it, so we might as well milk it for all its worth.' I think we got to stop all that and reign it in."
Editor's note: This article has been changed to better define occupational taxes as being levied against individual workers.
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