Alaskans have it good with taxes, PF dividends

Posted: Friday, March 30, 2007

There’s something a tad ironic about the dual deadlines facing Alaskans. The first hits at midnight Saturday, the deadline to file for the 2007 permanent fund dividend. That deadline comes just as many people are scrambling to beat the second one: the April 17 deadline for filing federal income taxes. (Yes, April 17 is correct. Taxpayers will have extra time to file and pay because April 15 falls on a Sunday and the following day, April 16, is Emancipation Day, a legal holiday in the District of Columbia, which also buys procrastinators a little time.)

With getting money from the government and giving money to the government on a lot of people’s minds, it’s a good time to look, again, at how the tax burden of Alaskans compares with that of friends and relatives in other parts of the country.

Only two states will mark what the Tax Foundation, a nonpartisan tax research group based in Washington, D.C., calls “Tax Freedom Day” earlier than Alaska. Oklahoma and Alabama have the nation’s lightest total tax burden and will mark the day April 12, followed by Mississippi and Alaska who celebrate April 13. The states with the heaviest tax burden and the latest Tax Freedom Day are in the Northeast. Connecticut residents have to work until May 20; New York residents until May 16. Nationwide, Tax Freedom Day arrives April 30, two days later than in 2006.

According to the Tax Foundation, that means Americans will work four months of the year before they have earned enough money to pay this year’s federal, state and local taxes.

“Americans work a significant number of days each year to pay for things other than government, but nothing else is so expensive,” write the authors of the study, Scott A. Hodge and Curtis S. Dubay. “Americans will work longer to pay for government (120 days) than they will for food, clothing and housing combined (105 days). Since 1986, taxes have cost more than these basic necessities.”

The report’s authors note that there is one category of spending that has grown faster than taxes: health care. “The number of days Americans worked to pay for medical service jumped from 29 days in 1982 to 52 this year, a 23-day increase in 25 years.”

Before Alaskans jump on the bandwagon about how much they pay in taxes, they need to consider these things: they have one of the lowest overall tax burdens of any place in the nation, they have one of the highest qualities of life and in no other place do residents get an annual permanent fund dividend check. Last year’s check meant an extra $1,106.96 to every man, woman and child who qualified. This year’s check is expected to be even larger.

Alaskans also need to consider what they expect from government and who should pay for what they expect from government. Tax time is a good reminder that there’s no such thing as a free lunch, but Alaskans’ permanent fund dividends come pretty close. Not only that, but Alaskans finish paying their tax burden more than a month earlier than many of their counterparts in the Northeast.

It could be a lot worse.

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