Time for a bit of light history. Don’t worry, there’s not going to be a quiz afterwards. But it turns out sometimes you have to know some history to understand why your paycheck in 2015 doesn’t always pay all the bills.
For 114 years, Alabama has been governed by the Alabama Constitution of 1901. It is the longest document of its kind in the United States, and for that matter, the world. It is also the reason for most of Alabama’s problems.
In the wake of Reconstruction and the first post-Reconstruction constitution enacted in 1875, over 100,000 African-Americans in Alabama were legally eligible to vote. This was an intolerable situation for most white Alabamians. The quarter century between 1875 and the Constitutional Convention of 1901 was marked by violence, gerrymandering, and outright vote stealing, all in an effort to nullify the black vote.
This was the reason voters called for a constitutional convention in 1901. The purpose was to disfranchise blacks, to finally and forever remove their right to vote.
This is not a matter of historical debate. These days, accusations of racism, which are invariably denied, are often based on insensitivity and coded phrases that could be interpreted as racist. There was no such subtlety in 1901. Back then, politicians did not need to sugarcoat their racist views. The president of the convention, Anniston lawyer John B. Knox, clearly stated the reason for a new constitution:
And what is it that we want to do? Why it is within the limits imposed by the Federal Constitution, to establish white supremacy in this State. This is our problem, and we should be permitted to deal with it, unobstructed by outside influences. But if we would have white supremacy, we must establish it by law—not by force or fraud. These provisions are justified in law and in morals, because the negro is not discriminated against on account of his race, but on account of his intellectual and moral condition. There is in the white man an inherited capacity for government, which is wholly wanting in the negro.
Yep. Our constitution, the one that still governs our state, was passed to make sure blacks could not vote.
The politically powerful big planters and “Big Mules” – the industrial and economic elite – went further and adopted a constitution that not only disfranchised blacks, but also disfranchised most poor whites. A poll tax, a two-year residency requirement, a literacy requirement, and a property-ownership requirement effectively barred blacks and poor whites alike from voting.
Alabama never took any of these voting provisions off the statute books. They were struck down by various federal courts following the 1965 passage of the federal Voting Rights Act, which barred states from imposing these kinds of requirements in order to vote.
The planters and Big Mules who controlled the convention 114 years ago had another agenda besides stripping the right to vote from blacks and poor whites. They also wanted to make absolutely sure that the people of Alabama had absolutely no voice and, most important, no ability to ever raise taxes.
This goal the Alabama bigwigs accomplished with a vengeance, passing the most undemocratic constitution in the history of the United States. First, the new constitution stripped all power away from local governments and put it all in the hands of the legislature in Montgomery. To this day, any significant law affecting only one Alabama city or county has to be passed as a constitutional amendment, first by the legislature, and in most cases also by statewide referendum.
A few examples. It took constitutional amendments to allow Jefferson County to remove junk cars from public streets; to allow Mobile County to control its mosquito problem; to allow Jefferson County to accept renewals of car tags over the Internet to shorten lines at the courthouse; and to allow Limestone County to dispose of dead farm animals. There are over 800 amendments to our constitution, and most of them are on completely local issues. Relatively few amendments actually deal with matters of statewide importance.
Journalist Bailey Thompson hit the nail on the head when he wrote:
Our situation is like asking Moses to tack a few hundred amendments onto the Ten Commandments, including one to legalize camel racing for the tribe of Judah.
It is necessary to tack on all these amendments because the 1901 Constitution vests all power in the legislature in Montgomery, and strips all authority from local governments.
This arrangement allows all lobbying efforts by ALFA, the AEA, and the Business Council to be focused on the legislature in Montgomery. It does not matter who is elected to local city councils, because those bodies have no power. The special interests can therefore focus on Montgomery, and focus they have. Our state government does nothing but serve those special interests.
Second, the 1901 Constitution made sure that property taxes could never be significantly raised, and locked tax rates at a level that, to this day, are woefully inadequate to fund state government, schools, infrastructure, or industrial development.
The truth is that without taxes a government cannot provide services, and because Alabama does not raise enough revenue by taxation, Alabama’s state and local governments provide services that range from meager to non-existent. Governments need money to build and maintain schools and colleges, to build and maintain roads, to provide adequate medical care for the indigent, to maintain prisons that humanely house convicts, to maintain social services for those in need, and many other things. When states and their local governments adequately provide these services, it increases the quality of life for the residents, and makes the area an attractive place for employers from out of state to locate. Look at Georgia, for example. Georgia has no natural advantages over Alabama. People flock there because the people of Georgia decided long ago to raise taxes so Georgia can provide its citizens world-class infrastructure, including schools, universities, parks, and industrial development.
Alabama’s taxes, on the other hand, are so low, so unfair, and so restricted by earmarking that our state is hobbled. Like a horse with two hind legs bound together, we can only stumble slowly towards the prosperity and quality of life that the rest of America seems to race towards. For far too long, out-of-state companies have treated Alabama like a third world country, providing low-wage jobs to strip out our national resources like timber and coal and then using those resources elsewhere to make sophisticated goods (employing people outside of Alabama at good wages). Alabama gets little benefit from its own natural resources.
Some believe industries do locate in Alabama because of our low taxes. Our strategy to attract industries and jobs to this state, some argue, should be to lower taxes even more. In response to this, I could not put it better than the following from a 1990 Pulitzer prize-winning editorial series in the Birmingham News: “Like a painted woman who expects the cheap evening she offers to attract potential dates, Alabama has for decades used its promise of low taxes to lure businesses and industry. It’s about time this state learned what all cheap dates eventually discover: That they get taken advantage of.” Click the link to read the entire series.
If lower taxes were the answer to attracting business, then Alabama’s economy should be booming. Alabama’s taxes are not just low. They are the lowest. Alabama has the lowest taxes in the United States. Alabama’s tax revenue on a per-person basis as of 1999 was only two-thirds the national average. No other state puts as light a tax burden on its residents and businesses (not even Mississippi). No other state has lower property taxes. No other state gets so little revenue from property taxes, which forces Alabama to rely on income taxes and sales taxes, which are volatile sources of state income subject to the ups and downs of the economy.
So if the “low taxes attract industry” folks are right, then why is Alabama not first in industry? Why do states like North Carolina, Georgia, and Tennessee attract business and industry when those states have much higher taxes?
The answer is that lower taxes only attracts businesses who want to own land in Alabama, and who want to pay low wages for unskilled work. Other states succeed where we do not because the leaders of those states have figured out that no high-tech company wants to move to a state where skilled and educated workers are scarce, and where its employees and executives cannot send their children to quality schools.
Proof? The top four landowners in this state, the ones that pay scarcely any taxes on their property in Alabama, are timber companies. Despite their eagerness to take advantage of Alabama’s low property tax rates, not a single one of those four companies has chosen to locate its headquarters in Alabama. Alabama’s a cheap date, but not one you would want to marry.
Alabama’s taxes are also unfairly targeted. One of the great accomplishments of the big planters in enacting the 1901 constitution and in later changes in the tax law was to ensure that property taxes on large tracts of land, especially timber, were taxed at abysmally low rates. Georgia Pacific pays less property taxes on an acre of prime timberland worth $500,000 than the owner of a $125,000 home in Jefferson County pays. On what planet is that even remotely fair?
Finally, Alabama is forced to rely heavily on sales taxes. Sales taxes inherently impact the poor and middle class more than higher wage-earners and corporations. Also, Alabama is one of the few states that collect sales taxes on groceries. Farmers (and huge agribusinesses) get a break, though. No sales taxes on farm supplies. This means that a poor person buying eggs pays sales taxes, but the agribusiness buying chicken feed to produce the eggs pays none. You pay full sales taxes on milk for your kids, but a much lower sales tax if you buy a luxury car. Alabama’s system of sales taxes and exemptions is sickeningly unfair, and inures to the benefit of the special interests who influence the legislature in Montgomery.
So Alabama taxes are low and unfairly target the poor and middle class. There’s more. Once the government has the money, it has little flexibility to spend it where it needs to be spent because most of the money (7 out of every 9 dollars) is earmarked for a specific use. When sales tax revenue drops because the economy tanks, the legislature and the governor are prohibited from shifting money around to cover what needs to be covered.
It would be like your employer paying you in money that you can spend on utilities and groceries, but never mortgages or car payments. So you get a second job that pays money you can only spend on car payments and your mortgage, but nothing else. Guess what? If you lose that second job, bye bye house and car. If you lose the first job, the power goes out and you starve.
This is exactly what happens every time Alabama is in a recession. Government services paid out of the general fund have to shut down or be prorated, even though there may be surpluses in the education fund or the pension funds. While the government overall may have money, they have to lay off government employees anyway, because earmarking prohibits borrowing from one fund to pay the obligations of another fund.
Alabama needs tax reform. It is not really a matter of reasonable debate. Even the Alabama Business Council, traditionally a stalwart anti-tax conservative group, now agrees that Alabama cannot attract industry and improve the quality of life for Alabamians without significant changes in our tax system.
The 1901 constitution has to go. Everybody knows it, but since big money wants to keep taxes low, it is not going to happen unless you demand it. Yes, I’m talking to you again. Pay attention and vote against candidates who are not in favor of trashing the constitution and starting over from scratch.