Gov. Bob Riley is urging state lawmakers who represent Jefferson County to quickly pass a revenue bill for the county that would let the county commissioners avoid a crisis of service reductions and massive layoffs.
Failure by lawmakers to act, he said, could harm the county for 10 to 20 years.
Riley said he has told county legislators that if they can agree on a solution, he would quickly call a special session of the Legislature, to start by the first week of August, to debate a re-enactment of the county's occupational tax.
But Riley said he won't call a special session, which would cost at least $110,000, unless he is assured there is enough support among the county's seven senators and 18 representatives, and in the entire Legislature, to pass a revenue bill for the county.
I have sent the following section of this post to the entire Jefferson County Legislative delegation and Governor Bob Riley.
As I recently posted, re-enacting the occupational tax would likely result in an unconstitutional law that will be overturned on appeal. I will now justify this assertion. This is from Justice Moore’s concurring opinion on a 2003 case:
I am compelled to conclude that neither § 40-12-4 nor § 40-12-31 permit an occupational tax on "gross receipts" of an individual's earnings or of a business, *83 because such a tax is a tax on "income" and is prohibited by the limitations of Amendments No. 25 and No. 662 to the Alabama Constitution of 1901.
A 1936 court precedent classifies an “occupational tax” as a tax on income.
In anticipation of the ratification of Amendment No. 25 the Legislature passed an enabling act, levying a tax on the incomes of individuals and corporations at the rates specified in Amendment No 25. State v. Weil, 232 Ala. 578, 584, 168 So. 679, 684 (1936). The tax on an individual's income was based on the individual's "gross income" less certain deductions. 232 Ala. at 584, 168 So. at 885. The Legislature broadly defined "gross income" as:
" 'gains, profits and income derived from salaries, wages or compensation for personal services ... including the salaries, incomes, fees or other compensation ...; also from interest, royalties, rents, dividends, securities or transactions of any business carried on for gain or profit and the income derived from any source whatever.' " (FN11)
In Weil, this Court held that the purpose of Amendment No. 25 was "to remove net incomes, as a subject of taxation, from the influence of the decision of this court in [Eliasberg Bros.]" State v. Weil, 232 Ala. at 583, 168 So. at 684. In effect, Amendment No. 25 removed income from the class of property for purposes of taxation and placed it in the class of those privileges subject to excise taxation. 232 Ala. at 583, 168 So. at 684.
An occupational tax IS a tax on income, and therefore subject to the Constitutional limitations on HOW MUCH income tax can be levied by the legislature.
The tax that the Legislature is considering, and that Riley is encouraging, violates the Alabama State Constitution. Anybody opposing the tax could use this to get the tax overturned by the AL Supreme Court, and then they’ll be right back where they started.
I understand that taxes are necessary to the operation of government, but those taxes must abide by the law! A tax that violates the laws of this government is an insult to the very rule of law that we claim to espouse. How can one honestly claim that it is wrong for individuals to violate the law if they ALSO claim that our government can violate the law because they “need” the tax revenue so badly?
The tax that the Legislature is considered enacting for Jefferson County is illegal and therefore SHOULD NOT BE ENACTED. I hope the Jefferson County delegation is listening.
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