1. Federal income and FICA taxes will no longer be
deductable from state income taxes. The people will be taxed on
income that has already gone for taxes. People would be taxed
TWICE. Cost: $658 million annually.
2. Deed and mortgage taxes will be doubled. Recording a
deed will increase from 50 cents to $1 per $500 of property
value, and mortgage taxes will increase from 15 cents to 30 cents
per $100 of the amount borrowed. Cost: $44.8 million
3. The sales tax on cars, boats, recreational vehicles,
tractors, farm equipment, and industrial machinery will increase
from 2% to 2.5%. Cost: $53.9 million annually.
4. The lease and rental tax on cars and trucks will double
from 1.5% to 3%. Cost: $20.3 million annually.
5. The cigarette tax will almost double from 16.5 cents to
31 cents per pack. Cost $50 million annually.
6. A sales tax on vending machines. Cost: $1 million
7. An insurance premium tax. Cost: $5.2 million
8. A tax on stocks, bonds, and other
"intangible" property. The rate would be $1 per $1000
of market value. Cost: $55 million annually.
9. HUGE property tax increases. Cost: $425.8 million
annually (probably a far too low estimate).
10. A “sales” tax on essential services. Cost:
$57.5 million annually.
Riley’s amendment drops the state’s rate from 6.5
mills to 3.5 mills and increases the homestead exemption
slightly--from $40,000 to $50,000, but the kicker is that all
property will be assessed at 100%.
Currently, agricultural and residential property is assessed
at only 10%, so even with the millage reduction, the state tax
goes UP more than FIVE FOLD, and the LOCAL taxes go up TEN FOLD.
Rental and business property is currently assessed at 20%. Here
the state taxes go up over 2.5 times and the local taxes go up
five times. Utility property is currently assessed at the maximum
rate of 30% Even utilities will be hit with an 80% increase in
the state taxes and a 233% increase in the local taxes.
Bottom line--everybody loses--big time. That’s
everybody, including non-property owners who rent, lease, or buy
any service or product from any Alabama business or utility.
Various Riley supporters claim that average home and farm
taxes will increase only about $60 to $132. Dana Beyerle, a
writer for Times Daily (TimesDaily.com), claims that no home
(outside of Huntsville, Mountain Brook and Vestavia Hills) will
be taxed more than 0.3% of its market value.
Let’s see. Let’s do the math on a typical $100,000
rural home. This example is for Elmore County, one of the lower
taxed counties. The millage will vary from county to county, but
the huge increases will take effect everywhere.
The current way:
$100,000 home with $40,000 homestead exemption: Taxable value:
$60,000. Assessed at 10%.
State tax: 6.5 mills 39.00
County tax: 8.5 mills 51.00
"CW" 4.0 mills 24.00
School tax 3.0 mills 18.00
Total Tax $132.00
$100,000 home with $50,000 homestead exemption:
Taxable value: $50,000. Assessed at 100%.
State tax 3.5 mills 175.00
County tax: 8.5 mills 425.00
"CW" 4.0 mills 200.00
School tax 3.0 mills 150.00
Total Tax $950.00
Bottom line: YOUR PROPERTY TAX WILL GO UP SEVEN TIMES
even in the rural, lower taxed counties. A $100,000 home will be
hit for nearly 1% of its market value--more than three times Dana
And if you live in a city or one of the higher taxed counties,
your tax will rise even more. Huntsville, for example, hits its
people for 26 mills. That’s $1300 just for one local
tax--up from $130.
Riley claims that Alabama’s current use provision for
farm and forest land will be mostly preserved, at least for the
smaller landowners. But that will not prevent steep tax
increases. The increases are built into the assessment jump from
10% to 100%. Taxes will still soar to seven or more times the
And to put the icing on the property tax cake, Riley has
thrown in a mandate for annual re-appraisals. That, of course,
pours even more gasoline onto the property tax wildfire,
especially when the cost of the re-appraisals is added to the tax
A “sales” tax on services is just as horrible.
Even though the amount is a great deal lower than the property
tax, the actual cost is very high for three reasons:
a. Most services are absolute essentials--repairs on cars,
appliances, homes, etc.
b. The people who perform these services are primarily low to
middle-income people who can least afford any extra burdens.
c. The paperwork involved would be horrendous, both for the
service providers and the state or whoever collects the taxes.
This is essentially an occupational tax on the self-employed. The
heated opposition to an occupational tax in Montgomery last year
(and also 30 years earlier in 1972) is irrefutable proof that an
occupational tax of any kind--even at 1% (1972) or 1.5%
(2002)--is too much of a burden for any sane person. A statewide
occupational tax of 4% is unconscionable, especially when added
to state and federal income taxes.
How will this tax be paid? Some claim that it might be
monthly. If that is true, every small landscaper, repairman, or
whoever will have to file 12 tax returns every year. That alone
would be unbearable.
Riley’s total tax cost will be $1.37 billion in EXTRA
taxes every year--over and above the already too high $6 billion
we are already paying. The added cost of extra paperwork and
mental anguish in compliance costs could easily come to another
hidden $500 million or more. It would be the most massive tax
increase in the state’s history--23%.
The economic impact will be catastrophic. No business wants to
suffer from excessive taxes and government. And skilled and
educated people are going to flee as soon as additional
government intrusions are added to their already low wages and
Remember the hundreds of millions squandered for Mercedes,
Honda, Toyota, and Hyundai to provide collectively about 5000
jobs? If Riley’s tax package gets loose, Alabama will lose
many times that number. Wallace Malone, CEO of Southtrust Bank
calculated a statewide loss of 30,000 jobs. The Beacon Hill
Institute estimates Alabama will lose 24,000 jobs per year along
with a loss of $2.3 billion in disposable income.
The “accountability” portion of Riley’s tax
package is a joke. Does anybody believe “pass-through
pork” will really be stopped? If that was true, they would
not be raising taxes; they would be lowering them and reducing
spending. Instead, they keep passing pie-in-the-sky budgets and
demanding more money. Last year was no exception.
Riley claims that the $675 million over-budgeting deficit he
inherited from Don Siegelman can only be corrected with his
draconian idea. BUT if he is asking for more taxes to pay off a
deficit, WHY is he asking for more massive spending increases to
add to it? It would be extreme just to ask for enough to satisfy
But adding Riley’s “world class” education
system, “free” college scholarships, pre-kindergarten
programs, and extra funding for other state agencies to the
budget wildfire is absolute insanity. Riley even claims that his
new tax package will attract high-wage businesses to the state.
If anybody believes that, I have a bridge in New York I’ll
The solution, of course, is to VOTE “NO” on
September 9. This will force the state to do what it needed to do
in the first place--tighten its belt. The recklessly excessive
state budgets will be cut by Constitutional mandate. This is the
18% across-the-board spending cut that has the statist doomsayers
Even then, current state revenues are expected to increase 5%.
That’s still too much to provide a needed government
reduction, but we can at least hold its rampant growth down to a
Even Russellville’s notorious State Sen. Roger Bedford
is optimistic that Riley’s crazy idea will bite the dust.
He said, “It’s running 50-50 in my district. Fifty
percent expect me to kill it, and fifty percent want the chance
to kill it themselves.”
Let’s make sure we do kill it ourselves.