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6 days ago

Republican tax bill likely to raise taxes for corporations in Alabama, but the state legislature can change that

The Alabama Department of Revenue last month published an analysis of the Tax Cut and Jobs Act’s (TCJA) effects on the state’s tax law, and its conclusions could cause some companies to pay more in taxes.

Though the federal corporate income tax rate has been reduced, the tax bill offsets that revenue loss with other provisions broadening the tax base in the form of new taxes and limited deductions, and those offsets will automatically be applied to Alabama’s tax law.

The reason is because Alabama’s corporate income tax laws conform to federal tax laws, per the state’s statutory framework. When lawmakers in Washington make a change to the federal corporate income tax, that change automatically applies to the corporate income tax Alabama, with a few exceptions.

“General speaking, so goes the federal income tax, so goes the Alabama income tax for corporations,” Bruce Ely, a partner at Bradley in Birmingham and adjunct tax professor in the University of Alabama Graduate Accounting Program, told Yellowhammer News.

Among the revenue-raising provisions in the department’s analysis is the limit to business interest deductions.

Companies utilize the business interest deduction to write off borrowing costs associated with taking out loans to pay for operations.

According to Ely, it is also common for companies to borrow money, loan it to a smaller sister company so operating as a sort of internal bank and then write off the interest. That deductibility has been reduced on the federal level and, as a result, has been reduced in Alabama.

Another piece that Ely says will be punitive to corporations in Alabama is the global intangible low-taxed income or “GILTI” provision and the repatriation tax provision.

Under the tax reform bill, companies repatriating foreign-earned income back to the U.S. will have to pay a tax on that income to the federal government at a reduced rate. If that company does business in Alabama, the department says the company will also have to pay an apportioned tax to Alabama.

The state legislature has the ability to “de-couple” from such provisions so they will not become state law, and thus avoid raising taxes on corporations, but the provisions are already in effect and the legislature doesn’t reconvene until next March.

Gov. Kay Ivey could call a special session to address these questions, but that is unlikely.

Aside from those specific provisions, another way the tax bill could increase corporate income tax revenues results automatically from the federal rate cut.

Alabama allows taxpayers to fully deduct federal income tax payments against their tax liability to the state, one of only two states to do so.

“As you pay less to the federal government, you’ll almost automatically pay more to the state government because your state tax deduction is less,” Ely explained. “It’s just an automatic thing. You can’t blame the Department of Revenue, or the legislature, or the governor. It is simply a matter of the Alabama constitution.”

A study commissioned by the Council on State Taxation estimates a net 11 percent increase in corporate income tax revenue for Alabama, following the tax bill’s passage. That number doesn’t account for additional revenues raised by the reduced individual state tax deduction for payment of federal income taxes.

Ely believes that 11 percent corporate increase could raise between $60 and $75 million this year.

“It’s just a politician’s dream, because the politician hasn’t had to pass a bill or take a vote. It’s automatic. It’s manna from heaven for the Alabama Legislature,” Ely said.

In a statement to Yellowhammer News, the Department of Revenue said that its analysis is not act of policymaking, but rather an explainer.

“The Department’s TCJA guidance serves the limited purpose of explaining where Alabama’s income tax laws are tied to the TCJA changes (and where not),” the statement said. “It is not a policy statement regarding whether we should be tied to any particular TCJA provision. We have and will continue to discuss TCJA issues with various stakeholders.”

Correction: An earlier version of this article said the state constitution requires that Alabama’s corporate income tax laws conform to federal tax laws, whereas conformity is dictated by a statutory framework.

@jeremywbeaman is a contributing writer for Yellowhammer News

2 mins ago

Advice for the Wiregrass: If you want an Interstate highway before the automobile is obsolete, start a full-court press immediately

One of the hot-stove topics making its way around Alabama is the possibility of a new east-west Interstate highway through the center of Alabama.

The proposal is what people are calling “Interstate 14,” which would run parallel with U.S. Highway 80, crossing into Alabama from the east in Phenix City and passing by Tuskegee, Montgomery, Selma, Demopolis and exiting Alabama to the west on the way to Meridian, Miss.

There are already parts of it in place along U.S. Highway 80, near Phenix City and Montgomery. But the idea is that it could supplement Interstate 20 to the north by offering an alternate route that would avoid congestion in Atlanta and Birmingham and connect Columbus, Ga. to the Interstate highway system beyond the existing I-185 spur.

Earlier this month, Dothan Mayor Mark Saliba cried foul over the current proposal, which has the route passing Dothan to the north by 100 miles.

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“We feel like we have been cut out for many decades, it has hurt us, we have grown a great city but we need an interstate this way before those in the middle of the state do,” Saliba said of the I-14 proposal in an interview with Alabama Media Group.

It’s hard to see where an east-west Interstate highway through the Wiregrass would go. If such a route were proposed, it would probably follow U.S. Highway 84. But in 2018, is there any demand for a new route connecting Dothan, Enterprise, Elba, Opp, Andalusia, Evergreen, Monroeville and Grove Hill beyond what is already in place?

Probably not.

That’s why the route the Wiregrass needs is a north-south route.

If anyone has ever made a trip from Alabama to the Florida beaches between Apalachicola and Fort Walton Beach, at any point along the way, perhaps making your way through one of the various one-light speed traps along U.S. Highways 231 or 331, you thought, “Wouldn’t it be great to be on an Interstate highway right now?”

The proposal gaining traction is an Interstate spur connecting Dothan and/or Enterprise to Interstate 10 32 miles to the south in Florida. Interstate 10 is a major east-west thoroughfare that starts in Jacksonville, Fla. and ends in Los Angeles.

“One of the things they’re pitching is that this has already been planned out, the money has already been spent, and that needs to be our strategy with the I-10 connector,” Enterprise City Councilman Turner Townsend said to The Enterprise Ledger’s Leah Lancaster in an interview published on Tuesday. There was a study done and there was a route ticked out. I think we need to (stay with) the I-10 connector, because practically speaking I don’t see them putting an east/west interstate through Enterprise.”

Even if you can get beyond the endless bureaucracy and favoritism politics of the Alabama Department of Transportation and its 50-year backlog of highway projects, the next problem to overcome with such a proposal would be getting cooperation from the Florida Department of Transportation.

If you consider the transportation needs in Florida include the metropolises of Orlando, Tampa, Miami, Jacksonville, etc., elected leaders in southeastern Alabama probably should have started yesterday working with Florida officials in the Panhandle if they want to see an I-10 connector in their lifetimes.

Unfortunately for the bigger cities in the Wiregrass, they’re a victim of geography. To many of our statewide political leaders, places like Dothan, Enterprise, Ozark, Elba, Opp, and Andalusia are so far removed from the Montgomery-Birmingham-Huntsville corridor that they might as well be in Florida.

Even with some very favorable circumstances in the Congress that made funding available, it took nearly 40 years for Corridor X (now Interstate 22) that connects Memphis and Birmingham to be completed.

The takeaway of that is the Mississippi portion was completed decades before the Alabama portion. If that’s a model for what people in the Wiregrass should expect from ALDOT, promote the project early and promote it often if you want such a route completed before the automobile is obsolete.

@Jeff_Poor is a graduate of Auburn University and is the editor of Breitbart TV.

West AlabamaWorks! is bridging the gap between workforce And industry

The workforce in West Alabama is changing with the help of West AlabamaWorks! They want to let people in the workforce know that being in healthcare does not strictly mean you are just a doctor or a nurse. There are hundreds of other job opportunities out there in hospitals, doctors offices, and insurance. Peggy Sease is Vice President of Human Resources and shares how her experience has led her to the position to work between the workforce and employers. The same goes for Lori Royer, HR Director, as she tells us what the industry is searching for in future candidates: attendance, diligent in all your duties, and have critical thinking skills. Our state has so many talented people, and Lori and Peggy are shrinking the gap between workforce and the industry with West AlabamaWorks!

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2 hours ago

Decatur High School teacher accused of having sex with students resigns

An Alabama high school teacher who was paid nearly $130,000 while on leave fighting charges that she had sex with students has resigned.

The Decatur city school board accepted the resignation of Carrie Cabri Witt on Monday.

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Superintendent Michael Douglas tells the Decatur Daily that Witt quit the day before the board was scheduled to hold a hearing on her employment.

The 45-year-old Witt is charged with two counts of having sex with a student.

She’s been on paid leave since March 2016 while fighting the accusations.

Witt’s resignation letter says she “vehemently” denies committing any crime or having any inappropriate relationship with a student.

The school district has spent more than $128,000 on salary and benefits on Witt since placing her on leave.

She worked at Decatur High School.
(Associated Press, copyright 2018)

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2 hours ago

How an incoming freshman overcame inner-city Chicago to get to Alabama State University – ‘This is the start of a new life’

Ivry Hall has a tale to tell – one that is too unbelievable and too tragic to be anything but real. But it is who life’s challenges have made him, and where Hall is going from here, that he wants to be his life’s story.

Chicago born-and-raised, Hall just turned 18 last month.

“I grew up on the South Side. Englewood, 64th and Laflin,”  he told WLS-TV. “My mom did a lot of moving, but that’s where I spent most of my childhood.”

His upbringing, like that of most in this infamous part of the Windy City, was filled with serious trouble.

“Gang banging,” Hall admitted. “I used to smoke when I was little.”

He also dropped out of school, saying that is what was expected of children like him in that urban neighborhood.

Hall said, “I did a lot of stuff. That’s just from the image I was seeing so I wanted to do it, too.”

And that was all before his mom, who was raising him as a single mother, got cancer when Hall was only 12.

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“When my mom passed away, I was so hurt,” he reflected. “And I just wanted to do better.”

This tragedy inspired Hall to go back to school, and after some time, attend Tilden High School.

While in a positive frame of mind again, his life did not necessarily get easier when he went back to get his education. Hall was living with a cousin who moved nearly two hours from where he went to class.

“I had to get on three buses and one train,” Hall explained.

However, through hard work and the right attitude, he always kept going.

“I don’t believe in giving up, and I think that failure is not an option,” said Hall.

Not only did his mom pass away when he was 12, but when he was a senior in high school, Hall’s dad died of lung failure.

“Of course, I lost my mom. I lost my dad,” he told WLS-TV in Chicago. “I wish they were still here to see what I’ve accomplished now, but they’re not. Everything is not going to come as you want it.”

Hall’s faith in Jesus Christ, sports and a local boxing gym got him through the hard times. He also had mentors at his church who never stopped encouraging him.

Hall said, “They are like, ‘Ivry, you’re going to be something. You’re so smart.’ And that stuff encouraged me to do good.”

“No pity party,” explained Father Michael Pfleger of St. Sabina Church, where Hall attends. “No ‘poor me.’ He was just a young brother who wanted the best for himself and others.”

Hall set a goal for himself when his mother died, and he never took his eye off achieving it.

“I always wish that I could graduate valedictorian, and look, I did,” he recounted. “I was beyond happy.”

Now, Hall is beginning his freshman year at Alabama State University in Montgomery, a triumph made possible in part by a $10,000 scholarship from his church.

The teen from the South Side of Chicago is just getting started on writing his life’s story, but he has a good plan for what comes next.

“Major in business, so I can open up my own business,” Hall forecasted.

He added, “I’m not for sure what I want to open up, but I want to help people.”

Hall now has his sights set on a new goal, and he is determined to succeed.

“I’m going to go to college and graduate, so I’m going to find a way to study,” Hall said. “I’m going to find a way to do everything without giving up.”

“If I give up, I will be just like everybody that I know,” he continued.

The young man also shared his key to overcoming the challenges life has thrown at him again and again.

“You have to give 100 percent in everything you do,” Hall emphasized. “Once you give up, you’ll only be used to giving up. At least try. If you can’t do it, continue to try.”

He has been through a lot in his short time on earth, but to him, a blank canvas awaits.

“This is the start of a new life,” Hall concluded.

Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn

3 hours ago

Former Prattville police officer gets 10 years for fraud, theft

A former police officer in Alabama who pleaded guilty to insurance fraud and burglary has been sentenced to 10 years in prison.

The Montgomery Advertiser reports 51-year-old Leon Todd Townson was sentenced Monday.

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The former U.S. Marine is one of two former Prattville Police Department lieutenants charged with breaking into a home in 2015.

The other lieutenant, 48-year-old John Wayne McDaniel, is set to be sentenced Friday.

Townson also was charged in 2017 with defrauding an insurance agency by filing a claim containing false information.

The fraudulent claim prompted the agency to award Townson more than $190,000.

He resigned from the police department in 2005 before pleading guilty to trying to sell a modified rifle seized by the department’s drug unit.
(Associated Press, copyright 2018)

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