Lawmakers announce flat income tax proposal

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With the frustration of doing taxes still fresh on the minds of the American people, two Alabama state lawmakers have unveiled a plan that would restructure Alabama’s individual and corporate income tax to permanently change the way taxes are done in the state.

Republicans Sen. Bill Hightower of Mobile and Rep. Lynn Greer of Rogersville announced a “radical new approach” to simplify the state’s income tax structure at press conference Tuesday afternoon, according to AL.com.

 The senator’s plan will serve to remedy what the Times Daily describes as an “unbalanced tax code has posed revenue problems [in Alabama]for decades,” by implementing a flat tax.

Defined as “one tax rate that is applied to all income with no exceptions” by the Alabama Policy Institutea flat tax essentially means that everyone in the state of Alabama would pay the same share of their income, no matter how much or how little they make. Further, a flat tax would not tax savings and investment, promoting job creation and capital formation, in order to help bolster Alabama’s economy.

“Every year, [the]state government gives away over $2 billion in incentives, credits, and exemptions,” Hightower said. His plan would solve that problem by reducing the individual income tax rate from 5 percent to 2.75 percent; the corporate rate would drop from 6.5 percent to 4.59 percent, according to details obtained by the Decatur Daily.

Designed to be revenue neutral, no official legislation has been filed or made public, should the Alabama Legislature pass the plan, it would still require a constitutional amendment and the endorsement of Alabama voters through a statewide vote before becoming permanent law. That could only happen in a special election, next year’s presidential primary or the general election.

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