In Fiscal Year (FY) 2013, Alabama collected $14.5 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average Alabama taxpayer can afford this level of taxation.
As shown in Chart 1, Alabama’s state and local tax burden (tax collections divided by personal income) was the third lowest in the nation for FY 2013 at 8.3 percent—or 20 percent below the national average of 10.3 percent. Not surprisingly, as shown in Chart 2, the tax burden has grown modestly over time by 33 percent to 8.3 percent in FY 2013 from 6.3 percent in FY 1950.
Alabama’s low tax burden is not driven by any particular element in their tax code. However, unlike states such as New York, all of Alabama’s state level taxes are fairly modest with tax burden falling at or below the national average. At the local level, the property tax burden is rock-bottom at 1.5 percent which is 54 percent below the national average (3.2 percent) and is the 2nd lowest ranked in the country.
Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every county in Alabama—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.
The Alabama counties with the highest local government tax burden include: Jefferson County, AL (4.5 percent), Mobile County, AL (4.2 percent), and Butler County, AL (3.8 percent). The Alabama counties with the lowest local government tax burden include: Lawrence County, AL (1 percent), Limestone County, AL (1.2 percent), and Pickens County, AL (1.3 percent).
J. Scott Moody has over 18 years as a public policy economist with a specialty in tax policy and has over 180 publications. He has worked for numerous national and state-based think tanks such as Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.