This article was originally posted on DothanHomeSearch.com
Why are Alabama Property Taxes so low?
This was a question posed on Trulia Voices last week. We have also discussed the subject here.
Having some of the lowest property taxes in the country does not mean that the government won't get in your wallet some other way. Alabama has a state income tax (5% on all income over $3,000 single/$6,000 married) and a state sales tax of 4%. Still, when comparing this tax structure with a high property tax state such as Florida, you'll see that the tax burden on the citizens of Alabama is still one of the lowest in the country. Alabama residents on average lose 28% of their income to federal, state, and local taxes, which ranks 49th in the nation. Only Oklahoma is lower.
While property owners benefit from the low taxes, there is a downside. Property tax collections in Alabama are used primarily to fund education. A federal lawsuit has been filed on behalf of some Lawrence and Sumter County public school students challenging the state's property tax system. The plaintiff's contend that Alabama property tax revenues do not sufficiently fund K-12 schools and that disproportionately hurts black students. You can read the article from the Birmingham News on AL.com (hat tip to Doc's Political Parlor).
The premise of the lawsuit is that property taxes, and all taxes for that matter, set up by the 1901 Alabama state constitution are racially discriminatory, and that local governments are forced to raise money for education using more regressive taxes, such as a sales tax. It certainly is an interesting argument. It is also certain that voters will not vote to change the property tax structure in Alabama. If this lawsuit is successful, change may be thrust upon us.
UPDATE - The Huntsville Times has a pretty good editorial about the lawsuit. And so does The Times Daily.
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