ANDERSON — Faced with the prospect of constructing a new Madison County Jail within the next five years, local officials are considering raising the local option income tax.
The county's local option income tax is 1 percent and raises $21.5 million. Those funds are distributed to all local taxing units, and a portion goes to provide property tax relief.
Cost of constructing a 400-bed jail has been estimated at $40 million to $50 million.
Raising the local income tax by a half percent would raise approximately $10.7 million on an annual basis.
A person making the state minimum wage of $7.25 per hour is currently paying $150 in local income taxes. That would increase to $225 if the tax is raised by a half percent and to $300 if the tax is doubled.
Rep. Bob Cherry, a Republican whose 53rd Distrct represents part of Madison County, said Friday he believes the county has the ability to raise the local option income tax.
Cherry said the maximum rate is 3.75 percent, so there's room for Madison County to increase it.
“The county has to work with the other cities and towns,” Cherry said. “There should be an agreement that all the money raised goes towards paying for a new jail. The jail benefits the entire county.”
Cherry said raising the tax would require a majority vote of the tax council.
Membership on the tax council is based on population with Anderson and Madison County having the most votes.
“It’s a local decision,” Cherry said. “The county doesn’t have many options to build a jail.”
Cherry said raising the property tax rate is not an option because of tax caps imposed by the Legislature.
“The income tax is a flat tax and a fair tax,” he said. “It’s based on a person’s ability to pay.”
Madison County Council President Steve Sumner, R-at large, said local officials need to discuss the options for financing a new jail.
He said raising the local income tax “may be one of the options. The other local units of government would have to agree that the money raised goes toward the jail.
“In the end, taxpayers have to pay for a jail,” he said. “It is something that has to be a part of the conversation.”
Sumner said without an agreement from the cities and towns, the tax increase option wouldn’t be feasible.
Mike Gaskill, also a Republican at-large councilman, said he is against a tax increase of any kind.
“It’s premature to say we have to build a jail right now,” he said.