Report ranks Alabama poorly for its business climate

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(The Center Square) — Despite moving up two spots from last year, an annual report continues to give Alabama poor marks for its business climate.

The report by the nonpartisan policy group the Tax Foundation ranked the Yellowhammer State 39th after ranking the state 41st in the previous edition.

Alabama was ranked 19th best for its corporate tax rate, 33rd for its individual income tax, 17th for its property tax, 15th for its unemployment insurance and dead last for its sales tax rate.

The state was bested by all of its neighbors, led by Florida (4th best business climate), Tennessee (15th), Mississippi (20th) and Georgia (32nd).

Alabama received low marks for its combined sales tax rate (the state rate is 4%), which averages 9.24% statewide. Some cities, such as Mobile and Birmingham, have rates of 10%.

The report also said Alabama is one of the states that “hamper economic growth by including too many business inputs, excluding too many consumer goods and services, and imposing excessive rates of excise taxation.”

Alabama also has the third-highest per-gallon tax on beer at $1.05, trailing only Tennessee ($1.29) and Alaska ($1.07).

The Yellowhammer State does collect the least amount of property tax per capita at $660, with the nation’s lowest effect rate at 1.38%.

It also has one of the nation’s lowest top marginal income tax rates at 5%, the same as its neighbor Mississippi.

Alabama also received strong marks as one of the states that places a cap on its capital stock tax.

Due to a budget surplus, lawmakers voted to give taxpayers a one-time tax rebate that will add up to $150 for single heads of households and $300 for those married who filed a joint return.

“From the very beginning, it has been my belief that it is the responsibility of government to be good stewards of taxpayer dollars while actively looking for ways to support citizens through tough times,” Alabama Gov. Kay Ivey said in a news release. “Our country is in the midst of tough times, and Alabama families from all walks of life are unfortunately seeing that their paychecks aren’t going as far as they once did. Thanks to our unwavering commitment to fiscal responsibility, one-time tax rebates will be with our hard-working Alabamians in time for the holidays.”

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