‘Tax Freedom’ may not be so free

Distinguished University Professor Emeritus, Auburn University

According to the conservative Tax Foundation, April 5 was “Tax Freedom” day in Alabama. That is the day when Alabamians no longer paid every dime they earned to local, state, and federal governments.

Theoretically, after that day we were free to spend all we earn any way we choose. As might be expected in America’s most conservative state, pundits and citizens congratulated each other on how lucky we are to live in “Sweet Home Alabama” instead of some liberal high-tax state such as Washington, Oregon, Vermont, or Connecticut. Perhaps so.

But we may not have as much discretionary income left as we think. Taxes fund infrastructure without which a state’s population drops steadily behind other states and countries in education and economic competitiveness. And there is also the “pay me now, pay me later” factor of increased social costs: prisons filled with illiterate or semi-literate inmates; poorly educated citizens who rely on welfare; a $1 million legal settlement to a South Carolina family whose wife/mother was killed when a tractor-trailer spun a loose piece of asphalt on I-20 through her windshield; long lines at the Jefferson County Courthouse where thousands of people waste endless hours standing in line to transfer a car title or purchase a tag.

The American Society of Engineers estimated in 2009 that Americans spend $67 billion annually on car repairs caused by shoddy road conditions. How much does graduation from a fine public high school or university add to our lifetime earnings? What economic penalty do we pay to live in a low-tax state?

Those were the questions rattling around in my mind one March “Tax Freedom” day back in the mid-1990s as I walked across the Auburn campus headed to the library. Gov. Fob James had just completed a press conference where he extolled the glories of tax freedom, noting that Alabama ranked number one among the 50 states and the District of Columbia for low taxes. After arriving at the library, I plunged into volumes of state rankings that listed just about every quality of life issues that differentiates states.

In order not to beat up on Alabama, I included Mississippi, Louisiana, and Arkansas, which trailed us in second, third, and fourth places with the lowest taxes. My hypothesis was that there would be a correlation between state expenditures on critical social, economic, and education infrastructure and these states’ quality of life.

Here’s the rank order of the four states on various quality of life indices.

•Infant mortality: 3,5,6,18

•Low birth-weight babies: 1,2,3,5

•Children living in poverty: 1,2,5,7

•High school dropouts: 10, 12, 13, 17

•Persons 25 and older with less than a ninth-grade education: 4,5,7,8

•Overall poverty rate: 1,2,10,11

•Median family income: 51, 50, 48, 42

•Per capita income: 50,49,45,40

•Changes in real income between 1979 and 1989: 51,49,46,44

•Expenditures per pupil in elementary/ secondary schools: 50,49,46,44

•Adults who completed high school:


•Adults who completed college:

43, 42,40,36

So, next time a pundit extols our good fortune on “Tax Freedom” day, head to your nearest library – assuming it remains open and can afford the subscriptions – and check STATE RANKINGS AND STATISTICAL ABSTRACTS OF THE UNITED STATES. What you discover may temper your celebration.