A FEATURE FROM THE SOUTH
We are pleased this week to run the following piece by Alabama State FAIRtax Director, Chuck Bailey, informing us about his team’s effort to bring about a state-level FAIRtax in Alabama. If we can get just one state-level FAIRtax up on the scoreboard and show that it is successful, the way to a national FAIRtax will be far easier. Please read Chuck’s article:
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AEFA presentation to Alabama legislators Current representatives and candidates for the Alabama State House learn about the Alabama Economic Freedom Act. 08/12/18
By Chuck Bailey, FAIRtax Volunteer, Alabama State Director
As the Volunteers try to make progress with enacting the FAIRtax, several states are pursuing enactment of a system that effectively emulates the national proposal at the state level. The thought is that several state systems will benchmark the attributes of this particular consumption tax system to lead other states and finally the federal government to follow suit and enact the FAIRtax . So far, Georgia and Alabama have bills that were written by the co-author of, and a rate study conducted by the Beacon Hill Institute for, the FAIRtax bill (HR 25/S 18). To date, Georgia has introduced their bill in the past two legislative sessions, while Alabama is updating its rate study in preparation of introducing its bill for the first time in the Spring of 2019. We have sponsors in the House and Senate along with the support of the House Speaker and many of the state legislators in both houses - some of whom supported writing the bill and conducting the rate study by donating funds to pay for the effort. In a recent discussion with Speaker McCutcheon, one of the donors, he stated “.... I am working with Rep. Holmes (sponsor). I believe the next few years will be the best opportunity for success.” Meaning, the time is right for a state FAIRtax-like system in Alabama.
How have we progressed this far with The Alabama Economic Freedom Act (AEFA) , - the title of the bill in preparation? By attending many, many, evening and weekend political, Rotary Club, Lions Club, etc., meetings over the past eight years and preaching the FAIRtax gospel. As a result, several state legislators contacted the Alabama State FAIRtax Director to request help with forming a state FAIRtax-like bill. With the help and guidance of the Georgia and Florida FAIRtax organizations, the bill and rate study were accomplished and are now being updated for next year’s legislative session.
What is The Alabama Economic Freedom Act? Like the FAIRtax, it is legislation to totally replace Alabama’s current sales/income tax system with a single rate inclusive consumption tax collected at retail sale, only once, on new products and services for purchases made by individuals for personal use. The rate is defined so the AEFA is revenue neutral with the current system. And, like the FAIRtax, retailers are reimbursed 1/4 % of the tax to cover collection costs. Further, the Income Tax Division is abolished while the Sales Tax Division is reformed to enforce the AEFA. The bill also includes a Family Consumption Allowance using HHS poverty level guidelines to determine the monthly prebate available only to legal Alabama residents. Since state taxes are “tied to” local option taxes, two areas needing more study are how to transform the current system to be compatible with the consumption tax and reconciling with the Legislative Fiscal Office the single rate value for the tax. As can be realized from this discussion, the AEFA is a version of the FAIRtax tailored to meet the needs of Alabama. It removes the distortions to economic activity caused by the current system with its exemptions, credits, deductions and exclusions across the board. It eliminates the embedded taxes in the price of goods and services caused by accumulation of taxes on labor and tax compliance costs. And, like the FAIRtax, it makes April 15th just another beautiful Spring day!
What steps are being taken to prepare for next year? As mentioned above, the bill and rate study are being updated. Once they are ready, the House Sponsor and State FairTax® Director will be “marketing” the AEFA across the state to business leaders, agricultural and farming organizations, civic organizations, etc. Of high importance are the thirty or more new legislators who will come on board in November this year. To get an early start with the new members, five primary election winners were invited to and attended a ninety minute presentation on the bill. Everyone was attentive with good give-and-take on the proposal. Classroom Training for New Legislators and Candidates for the Alabama House.
Classroom Training for New Legislators and Candidates for the Alabama House being given by Chuck Bailey
The AEFA was well received with some reservations as can be expected when proposing to totally replace the state’s sales/income tax system. Copies of the current rate study were forwarded to the five attendees plus one who had a scheduling conflict and could not attend. More of these presentations will be conducted as schedules allow.
Conclusion. Introduction of the Alabama Economic Freedom Act to the legislature next Spring is the goal of current efforts. Near term efforts are to update the rate study and finalize the bill. “Marketing” the bill across the state to the legislature and the public under the guidance of the sponsor will then be the main thrust to support passage of the bill once it is introduced. It will not be an easy task, but enacting the Alabama Economic Freedom Act places Alabama in position to lead the way to a national FAIRtax!
Chuck Bailey FAIRtax Volunteer
Alabama State Director
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CALL FOR PICTURES AND WRITEUPS
Thank you, Chuck, for contributing this article. We need more of you to send in pictures and news. If you have anything to share, please send your material to me at jim.bennett@fairtax.org, or text me at (908) 578-4975. When others see your activity, they are inspired, and the process snowballs. When the process snowballs, Congress Members and Senators and, yes, even the President start to listen.