Alabama House Minority Leader Anthony Daniels (D-Huntsville) thinks state taxpayers should continue to be able to keep more of their own money they earned from working overtime.
The state lawmaker is fighting to keep the tax cut in place despite new concerns about it causing a larger shortfall in revenue going to the state’s Education Trust Fund (ETF) than was originally projected.
“So this is not money that’s actually taken from the Education Trust Fund,” Daniels explained on FM Talk 106.5 Tuesday. “These are dollars that are going back in the pockets of hard working men and women that are working additional hours.”
Daniels was instrumental in House Bill 217 getting passed in the 2023 legislative session, which removed the state income tax obligation for a full-time, hourly wage employee for work performed over 40 hours a week. The tax break will expire on June 30, 2025 if lawmakers don’t extend it.
According to a recent report by the Alabama Dept. of Revenue, the tax break caused an impact of $230 million from January through September this year. It was originally estimated to only affect revenues by $38 million.
This has caused concern from some lawmakers, including State Sen. Arthur Orr (R-Decatur), who chairs the education trust fund budget committee in the Alabama Senate.
“But where do we go from here? You know if we do this again, I think we need a cap,” Orr said in a recent interview. “I like the idea, the concept…to take away the income taxes on the overtime pay. I have no fault with that, but it’s just the impact, unknown impact, that it wound up having on the budgets.”
Daniels responded to some of the concerns by pointing out the tax cut will lead to more economic growth in the future.
“Furthermore, the investment that in the overtime bill is allowing individual take home more money, but the return on investment for those dollars is estimated at $10.2 million to the entity, directly to the ETF, $14 million to local and counties,” he said. “Right then you have, because of the production schedule, that corporations are able to have to get their goods and services out, there’s been a 13.54% increase in tax revenue in FY 2024 alone, which is 164 million.”
The minority leader emphasized that this kind of tax cut really helps working people in the state.
“And what better way to cut taxes than to give hard working Alabamians the ability to take back home more of their money. It helps us if a company doesn’t have the individuals working overtime, it reduces their production, which then reduces their profit margins long term, which reduces the tax receipt, the corporate taxes that’s being collected by the state. So I’m not understanding how individuals are really misunderstanding the point of, why don’t we give people back more of their hard earned money you get in the first 40 hours, 5% of the first 40 hours. And so it just, it’s ridiculous to me.”
Yaffee is a contributing writer to Yellowhammer News and hosts “The Yaffee Program” weekdays 9-11 a.m. on WVNN. You can follow him on X @Yaffee
