As legislators attempt to close Alaska's nearly $1-billion budget gap, all options should be on the table and receive open-minded consideration.
That includes a statewide income tax.
The news last week that House Republicans likely would not take the recommendation of the bipartisan Fiscal Policy Caucus and consider both a statewide sales tax and income tax is, at best, disappointing. Instead, the House Finance Committee has decided a sales tax, along with other revenue measures, should be the preferred option for bridging the gap.
That decision by House Republican leaders is a step backward for Alaska in more ways than one.
A sales tax is more regressive than an income tax -- meaning, the poor are hurt more by it than the wealthy. As the state Department of Revenue has noted: "Lower-income people who spend a greater proportion of their income on local goods and services would pay a larger share of their income in sales taxes when compared to higher-income people."
A sales tax also hits the one-third of Alaskans who live in communities which have a municipal sales tax harder than it does those who don't. Those Alaskans who already are paying sales taxes in their communities are helping to pay for municipal government services they receive. Why should they have to pay more when some communities in the state -- most notably, Anchorage -- pay nothing in the form of sales tax?
The addition of a statewide sales tax in municipalities that already have a local sales tax might be just enough incentive for people to go elsewhere to shop -- the Internet, where they pay no sales tax; out-of-state catalogues; or Anchorage, where the sales tax would be less than, for example, on the Kenai Peninsula. The trickle-down effect on local businesses may mean some would have to close their doors.
A statewide sales tax may be necessary to help get the state's financial house in order, but it should not be considered at the exclusion of an income tax -- or any other option.
What's even more regressive than a sales tax is the politics behind the decision not to consider an income tax.
It seems House Republicans require the support of 15 members in their caucus to bring a measure before the whole House. House Finance co-chair Bill Williams, R-Saxman, said the measure did not have enough support.
What House Republicans apparently don't see is 15 members of their caucus is not a majority of anything but their caucus. It's a terrible way to establish public policy; it is, however, the best way to promote partisan politics and hurt Alaska.
House Republicans are ignoring a primary rule of leadership: listen to the wise counsel of others. Not only is this group ignoring the advice of other legislators -- including members of its own party and the bipartisan Fiscal Policy Caucus -- but it has chosen to ignore the Alaska Municipal League, which favors an income tax over a sales tax, as well as the testimony of many Alaskans who have said in multiple ways "tax me," with the preferred tax being an income tax, not a sales tax.
It also apparently chooses not to heed what the financial experts say: Budget cuts will lead to the most lost jobs in the state, and a sales tax will take more money out of Alaskans' pockets than an income tax.
We don't know who this group of legislators is listening to, but we have no evidence that it's a majority of Alaskans. In fact, when it comes to the best way to close the budget gap, the folks calling the shots in the Legislature seem to be in the minority.
Unfortunately, the rest of Alaska will be hurt by their unwillingness to consider all possible options -- including an income tax.
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