In Fiscal Year (FY) 2011, Alabama collected $13.09 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 the charts below, Alabama’s state and local tax burden (tax collections divided by personal income) was the third lowest in the nation for FY 2011 at 8.4 percent—or 19.6 percent below the national average of 10.5 percent. Not surprisingly, the tax burden has grown modestly over time by 32.6 percent to 8.4 percent in FY 2011 from 6.4 percent in FY 1950.
Alabama’s low tax burden is not driven by the absence of any particular element in their tax code. However, unlike states like 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 1.57 percent which is 54.6 percent below the national average (3.46 percent) and is the lowest ranked in the country.
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.