In Alabama, people earning the least amount of money – or less than $17,000 per year – are paying twice the rate in taxes compared to wealthier residents, a state public policy organization reports. 
One result, according to Arise Citizens’ Policy Project (ACPP): Low-income families are slipping into greater poverty at a time when income inequality has become a pressing issue to resolve in the country. Already, the state – which has 4.8 million residents – has an 18.6 poverty rate. That level is higher than the U.S. poverty rate of 15.4 percent.
ACPP released the statistics on Jan. 14. They were analyzed by the Institute on Taxation and Economic Policy and showed that low- and middle-income residents are paying 10 percent of their annual earnings in state and local taxes.
In comparison, state residents who earn at least $392,000 per year paid an average of 3.8 percent of their income in state and local taxes, ACPP said.
“Alabama’s upside-down taxes hold our state back,” Jim Carnes, ACPP policy director, said in a statement.
One solution, he said, is for state government leaders to end Alabama’s grocery tax and halt other tax breaks that favor high-income earners. Wealthier residents, ACPP maintains, can afford to pay more taxes.
“It would help Alabama raise enough money for crucial services like education and health care,” Carnes said.
While all states are regressive – meaning that a low-income earner actually pays a higher tax rate – Alabama’s tax structure is the 12th most regressive in the country. Similar to other states, Alabama relies on sales taxes. But the state does not offer any type of tax relief on groceries.
State residents also are permitted to deduct every dollar from their federal income taxes on their state income taxes. “This tax break disproportionately benefits rich households,” ACPP said.
In recent years, the state has relied on user fees which ACPP says affects low-income residents the most.
Arise Citizens’ Policy Project, based in Montgomery, Ala., is a coalition of 155 organizations and congregations working on public policies to help low-income residents.