Pro-Growth Plan Helps Middle Class and School Funding
Alabama's taxpayers have worked hard to turn a record budget deficit into a record budget surplus. Because of their hard work, we have the chance to invest more in our schools then ever before, save more in our rainy day fund than ever before, and help middle class families make ends meet with a responsible and fair tax cut. It's the right thing to do. Plus, the tax cut will stimulate economic growth, which results in even more funding for education.
Rep. Jay Love has sponsored our plan that gives 90 percent of Alabama families tax relief. It builds upon the bipartisan tax cut passed last year, which was the first tax cut passed in Alabama in 70 years. Last year's tax cut was good, but not good enough. Today, we have the ability and the resources to expand those tax cuts so they reach Alabama's middle class.
Under our plan, all families with incomes of less than $100,000 will benefit. Phased in over five years, our plan increases the per-child dependent exemption to $2,000. We increase the personal exemption for married couples and single taxpayers. The result is a family of four will pay no state income taxes on the first $15,500 of their income. That amount will be tax-free.
But we didn't stop there. Our record budget surplus supplied by the taxpayers allows us to do more. We proposed other pro-growth tax incentives that make health insurance more affordable, that help workers go back to school and get trained in new job skills, and that remove the sales tax on non-prescription medicine. Altogether, our pro-growth tax incentives will save taxpayers about $300 million a year.
The critics of our ideas have instead proposed cutting taxes for some by raising taxes on others, and the Alabama Revenue Department shows their proposal is a net tax increase on Alabamians. The critics also say cutting taxes hurts the Education Trust Fund. They fail to recognize that the only reason we're able to invest more funding in education than ever before is because Alabama's economy is strong and growing. Continued growth in the education budget requires continued economic growth. So we must invest in things that invigorate economic growth in order to continue growing the ETF. It's that simple.
Additionally, our proposals have a built-in trigger that requires increases in education funding before they can take effect. So anyone or any group that alleges our pro-growth tax incentives cut education funding is gravely mistaken. In fact, because of these growth triggers, the ETF will be at least $8.3 billion before our tax relief proposals are fully phased in. That's an increase of $1.7 billion over this year's proposed education spending level.
But keep in mind, that's assuming our pro-growth tax incentives do nothing to improve the economy. Yet it's been proven time and time again that pro-growth tax incentives stimulate the economy, which leads to increased revenues. At the federal level, pro-growth tax policies implemented by presidents like John F. Kennedy, Ronald Reagan and George W. Bush produced more tax revenue. It is unreasonable to think similar growth won't occur in Alabama - growth that leads directly to more funding for education.
You'll hear critics say our proposals "cost" hundreds of millions of dollars. It's invalid and incorrect to suggest pro-growth tax incentives are a "cost." On the contrary, anyone who knows anything about investing knows that what matters is the return. And the return on these proposals is a stronger economy that generates new jobs, higher incomes, new consumer spending - all of which produces ever-increasing returns for the Education Trust Fund.
This debate is not about "diverting" ETF dollars because we're not proposing to take any money out of the ETF. We offer a plan that guarantees more money for education. The critics do not. They offer a net tax increase and more of the same.