There’s a well-accepted societal standard that you should never discuss religion or politics in a social setting and that no one wants to hear other people’s opinions about money or taxes. Honestly, most people’s eyes glaze over when anyone starts discussing the economy or the tax code. It’s confusing, there is math involved, and it’s pretty boring. I get it, but I have some really bad news for you: That is exactly what the people collecting and spending the taxes want.
Withholding is arguably one of the most damaging things ever done to our country because it allows the government to take what is rightfully earned by you (your money) before you even get your hands on it. That way, it doesn’t even feel like it is yours or that you lost it (ahem, it wasn’t lost - it was taken). By estimating what they think you’ll owe and taking it by force before you even possess it, both state and federal government effectively control your income. Withholding makes your paycheck seem a bit like Monopoly money: kind of like real money but not really and a bit thinner and smaller. The truth is that taxes aren’t Monopoly money. Taxes are real money - and it’s yours. When the government takes money from you, it doesn’t become theirs. Your money remains the result of your hard-earned work, yet it has been taken by force. Don’t believe me? Skip filing your taxes this year and let me know what happens. Many new hires and young employees are completely crestfallen when they see the smallish number on their first official paycheck (or direct deposit). Who the heck is that FICA jerk and why is he stealing such a huge portion of our money anyway? To be abundantly clear, there is a role for government funding and a place for the (reasonable) taxation of an agreeable populace. However, there should also be a clear understanding that there is no such thing as government money; government doesn’t produce anything. Government is a taker, not a giver. Further, there should be decidedly tight restrictions on taxation combined with a keen understanding from the stewards of the state that, in fact, that is what they are: governmental stewards of other people’s (taxpayers') money.
Alabama is a historically poor state, but this year, the state coffers are flush with cash while most Alabama families are decidedly not. Credit card debt is soaring as our neighbors try to maintain their lifestyles under hyperinflationary conditions. Alabamians are literally having to borrow money and go into debt to feed their kids. According to Census data, the average Alabama household income is $71,964 annually. The income tax rate for Alabama is 5%, and the effective rate is 4.04%. In English, that means that the state of Alabama has taken $2,907 dollars of the average Alabamian’s pocketbook in state income tax this year. That’s a tiny scratch on the surface of your entire tax burden since Alabama has the fifth-highest combined state and average local sales tax rate in the country at 9.24%, but just for argument’s sake, let’s just leave the discussion at income tax. Could you use an “extra” $3,000 this Christmas? I’m guessing the answer is yes; I know my family could. If you lived in the Panhandle of Florida instead of the state of Alabama, you would have that money in your pocket to spend on Christmas gifts (or at least a few extra trips to the gas station and grocery store) because Florida doesn’t have a state income tax at all. Neither does Tennessee.
Guess what: It’s not just our neighbors to the north and south that are marching toward smaller tax burdens for their citizens. Mississippi just passed the largest tax cut in its state history. The governor hesitated to sign it, but only because he thought it wasn’t big enough. Georgia also passed the largest tax cut in their state history this year. In fact, thirty-two states and every single Southeastern state (except Alabama) implemented or enacted state sales or income tax relief during the past two years. Alabama claims to be a low taxation state like they claim to be a conservative state; lots of cute conservative campaign slogans and plenty of camo to distract people during campaign season followed by big tax burdens and big government policies the rest of the time.
Alabama is the hole in the center of the donut of the entire Southeast. Donut holes can be salvaged and are tasty, but the black hole of state government that takes your money without asking and refuses to even consider giving it back when they’re the ones who took too much in the first place is much harder to stomach. Alabama coffers have a surplus of over $2,000,000,000 with an extra $3,000,000,000 in savings, so you would think that there would be a movement toward (or even a serious discussion of) returning the extra cash to its rightful owners. Well, not really. State lawmakers are considering issuing taxpayers a tiny rebate check ($200) that would be less than 10% of what they’ve taken from the average Alabamian this year solely in state income taxes. That’s such a small percentage of the extra $2B in their pocket that my calculator and brain won’t even compute it and they’re banking on the fact that you won’t know the difference. What they’re discussing is kind of like finding a wallet in the parking lot with $10,000.00 cash in it and assuring the owner that you’ll be happy to return their wallet with $1.50 inside of it to them…if you feel like it…because the rest of it is your money now. But, maybe not because you have a pretty long list of wants and needs you’d like to fund first.
Finders keepers, losers weepers.
Instead of looking for ways to return the Alabama taxpayer's wallet, lawmakers and bureaucrats have been busy looking for ways to continue to grow state government to control you and your family more every day. Anyone else need broadband? How about government-funded electric vehicle stations? Unlimited tax incentives for global corporations? Another round of pay raises for all the state employees they deemed “essential” while “non-essential” business owners and their employees went without paychecks or were forced to close their doors? More advertising (ahem, propaganda) from ADPH on getting COVID-19 shots? Another historic pay raise for drag queen middle school math teachers? Did you know that state government spending increased by 35% the past four years (cough - Republican supermajority - cough)? As a point of comparison, let’s go back to the average Alabamian’s income. Assuming the average Alabamian spends all they earn (which is unfortunately true in many cases) and was able to increase their spending by 40%, that would mean that the average Alabamian household that made $71,964 in 2018 would have $100,749 to spend in 2022. Just for doing the exact same thing. Raise your hand if that’s you. If not, maybe we could use some meaningful fiscal policy discussions (money talk) as we’re rocking around the Christmas tree this year.
It will come as no surprise that I routinely ignore nonsensical societal admonitions to refrain from discussing religion, politics and tax policy around my kitchen table. Now that you know what’s really going on in Alabama, please feel free to join me in making sure your neighbors do too; then contact your representatives to tell them you want your wallet back. Your friends and family members might just thank you. I know I would.
Stephanie Holden Smith is an experienced policy analyst, political commentator, and public speaker. Smith has worked and volunteered in Governmental Affairs in Alabama since 1997, including lobbying for a Fortune 500 company and serving as Deputy Director of Finance for the State of Alabama. She is currently the principal of Thatcher Coalition LLC. To contact Stephanie, please go to http://thatchercoalition.com.
The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News. To comment, please send an email with your name and contact information Commentary@1819News.com.
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