Alabama Tax

[Edsel]

Anyone down there know what is happening with the proposed elimination of the FIT deduction in a swap for removal of sales tax on food?

For those of you in other areas who might be interested ... Alabama is the only state (I think) where you can deduct your FIT before arriving at state taxable income. For a long time those in favor of a "progressive" Alabama tax have pointed at this and claimed that high income taxpayers are actually paying a lower percent-to-income than low income taxpayers because of the FIT deduction, and basic "flat" tax of 5% on remainder. Also, I believe Montgomery would love to do away with it because this would not be revenue-neutral -- would instead be a windfall of money to spend.

ChEAr$, what about you? You know how this one is playing out?

[ChEAr$]

Alabama

Anyone down there know what is happening with the proposed elimination of the FIT deduction in a swap for removal of sales tax on food?

For those of you in other areas who might be interested ... Alabama is the only state (I think) where you can deduct your FIT before arriving at state taxable income. For a long time those in favor of a "progressive" Alabama tax have pointed at this and claimed that high income taxpayers are actually paying a lower percent-to-income than low income taxpayers because of the FIT deduction, and basic "flat" tax of 5% on remainder. Also, I believe Montgomery would love to do away with it because this would not be revenue-neutral -- would instead be a windfall of money to spend.

ChEAr$, what about you? You know how this one is playing out?

I'm here, just getting caught up after a working vacation in Baltimore.

That proposal got nowhere, and will get nowhere, IMNSHO. To remove the deduction for federal income tax, the legislature must first pass a bill placing it on the ballot as a referendum ( I guess that's the word) so that the state constitution is amended. And since legislators tend to be those who benefit from the deduction more than the
usual voter, .... well, you get my point.
And btw, there is one other state, I forget which, allowing the deduction.

[TaxmannEA]

Iowa also allows the dduction.

[Davc]

Or allows, but limited to $5,500.