State Rep. Garrett heads House effort to exempt CARES Act benefits from state taxation, end unintended tax increase resulting from 2017 Trump tax cuts

Among the executive orders issued by Gov. Kay Ivey toward the end of 2020 included waiving state tax liabilities related to benefits received under the federal CARES Act. The order came under the assumption the Alabama Legislature would follow suit promptly after gaveling in for its 2021 regular session.

One of the efforts to codify Ivey’s order comes from two Jefferson County Republican lawmakers, State Sen. Dan Roberts (R-Mountain Brook) and State Rep. Danny Garrett (R-Trussville), who also seek to make Alabama’s taxation competitive with neighboring states.

During an appearance on Mobile radio’s FM Talk 106.5 on Monday, Garrett explained the effort to reduce taxes on businesses and eliminate the federal income tax deduction.

The legislation would correct an unintended state tax increase because of the state tax code’s link to federal tax liabilities, which were changed by the federal government’s Tax Cuts and Jobs of 2017.

According to Garrett, merging the CARES Act issues and the residual effects brought by the 2017 changes to the federal tax code under then-President Donald Trump made sense given the effort was already underway before the pandemic.

“What happens, when you get into tax policy — the tax code is very, very complicated,” he explained. “And even the CARES Act relief — is all very complicated. To put this into one bill makes a lot of sense because it is something that requires input from the Department of Revenue to work with these code sections, providing that language makes a lot of sense. And I think it is related because I think our small businesses are very, very hurt by the COVID situation. But the timing of it is — we had this business tax initiative underway before COVID. We just kind of walked into that same timeframe, and it makes sense to work these together.”

@Jeff_Poor is a graduate of Auburn University and the University of South Alabama, the editor of Breitbart TV, a columnist for Mobile’s Lagniappe Weekly, and host of Mobile’s “The Jeff Poor Show” from 9 a.m.-12 p.m. on FM Talk 106.5.