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Alabama has the Seventeenth Lowest State and Local Tax Burden in the Nation for FY 2016

May 30, 2018

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In Fiscal Year (FY) 2016, Alabama collected $15.5 billion in state and local taxes—or $3,185 for every man, woman, and child. 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?

 

To better answer this question, this analysis will calculate Alabama’s tax burden relative to the private sector. Ultimately, it is the private sector that creates new wealth and income. A high tax burden means a state is hobbling its private sector relative to other states and reducing their long-run economic growth potential.

 

 

Click here to view tax burden data by state, type of tax, and for years 1950 to 2016

 

As shown in Chart 1, Alabama’s state and local tax burden (tax collections divided by private sector personal income) was the seventeenth lowest in the nation for FY 2016 at 13.1 percent—or -8 percent below the national average of 14.3 percent.

 

Chart 1 Alabama State and Local Tax Burden FY 2016.jpg

 

#Alabama state and local #taxburden in FY 2016 was the 17th lowest in the nation at 13.1%— -8% below US average of 14.3% http://bit.ly/2FX9C8F @keypolicydata #ALpolitics #ALleg #ALsen #ALgov #PolicyData (click to tweet)

 

As shown in Chart 2, Alabama’s tax burden has increased over time by 66 percent to 13.1 percent in FY 2016 from 7.9 percent in FY 1950.

 

Chart 2 Alabama State and Local Tax Burden by Type of Tax FY 1950 to 2016.JPG

 

#Alabama state and local #taxburden has increased 66% between FY 1950 (7.9%) to 2016 (13.1%) http://bit.ly/2FX9C8F @keypolicydata #ALpolitics #ALleg #ALsen #ALgov #PolicyData (click to tweet)

 

Click here to view tax burden data by state, type of tax, and for years 1950 to 2016

 

 

To put Alabama’s tax burden into perspective, let’s compare it to size of major industries in the state (as a percent of private sector income). As shown in Chart 3, Alabama’s 13.1 percent tax burden is greater than these combined industries: construction (6.2 percent), wholesale trade (5.1 percent), and educational services (0.9 percent).

 

Chart 3 Alabama State and Local Tax Burden vs. Major Industry FY 2016.JPG

 

#Alabama state and local #taxburden > construction, wholesale trade, and educational services http://bit.ly/2FX9C8F @keypolicydata #ALpolitics #ALleg #ALsen #ALgov #PolicyData (click to tweet)

 

Alabama’s lower than average state and local tax burden is driven by a low property tax burden (2.2 percent, lowest in the country), but is partially offset by higher taxes such as the sales tax burden (4 percent, 15th highest) and all other tax burden (3.2 percent, 11th highest).

 

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 20 Alabama counties with the highest local government tax burden include:

 

  • Dale County, AL (9.5 percent)
  • Macon County, AL (8.3 percent)
  • Jefferson County, AL (6.5 percent)
  • Mobile County, AL (6.5 percent)
  • Montgomery County, AL (6.3 percent)
  • Clarke County, AL (6.2 percent)
  • Calhoun County, AL (6.2 percent)
  • Wilcox County, AL (6.2 percent)
  • Butler County, AL (6.1 percent)
  • Tuscaloosa County, AL (5.5 percent)
  • Houston County, AL (5.4 percent)
  • Lee County, AL (5.3 percent)
  • Dallas County, AL (5.3 percent)
  • Escambia County, AL (5.3 percent)
  • Fayette County, AL (5.2 percent)
  • Russell County, AL (5.1 percent)
  • Etowah County, AL (4.9 percent)
  • Sumter County, AL (4.9 percent)
  • Marion County, AL (4.8 percent)
  • Covington County, AL (4.7 percent)

 

The 20 Alabama counties with the lowest local government tax burden include:

 

  • Hale County, AL (3.2 percent)
  • Coffee County, AL (3.1 percent)
  • Chilton County, AL (3.0 percent)
  • Cullman County, AL (2.9 percent)
  • Lamar County, AL (2.9 percent)
  • Autauga County, AL (2.8 percent)
  • Randolph County, AL (2.8 percent)
  • St. Clair County, AL (2.8 percent)
  • Franklin County, AL (2.7 percent)
  • Cleburne County, AL (2.7 percent)
  • Coosa County, AL (2.5 percent)
  • Henry County, AL (2.5 percent)
  • Pickens County, AL (2.5 percent)
  • Crenshaw County, AL (2.4 percent)
  • Shelby County, AL (2.4 percent)
  • Bibb County, AL (2.2 percent)
  • Elmore County, AL (2.1 percent)
  • Blount County, AL (2.0 percent)
  • Limestone County, AL (1.9 percent)
  • Lawrence County, AL (1.8 percent)

 

Chart 4 Alabama Local Tax Burden by County FY 2016.JPG

 

Click here to view tax burden data by state, type of tax, and for years 1950 to 2016

 

Finally, don’t forget to watch our exclusive time-lapse video of state and local tax burdens over the last 66 years! See if your state has been above or below the national average?

 

 

 

 


Category: Tax Burdens

J. Scott Moody

Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.


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