Time for legislators to ante up with plan to solve fiscal woes

Posted: Sunday, April 18, 2004

Last week was full of tax talk.

Procrastinators filed their federal income tax returns.

Legislators and Alaska municipal officials debated a statewide sales tax proposal.

A poll by the Alaska Municipal League showed two-thirds of Alaskans are willing to pay either a 3 percent sales tax or a 3 percent income tax to avoid further cuts to services provided by the state.

And a poll by The Associated Press showed that by almost a 2-to-1 margin, Americans prefer balancing the nation's budget to cutting taxes. That's even though many believe their overall tax burden has risen despite tax cuts over the past three years.

In the midst of it all, while perhaps complaining about the high prices of gas as they fill their SUV tanks, Alaskans secretly breathed a sigh of relief as they heard how extra high oil prices are delaying the date a state savings account is projected to run dry. While some may see those high prices as giving legislators another reason to postpone tough decisions on the state's fiscal matters read that new taxes or a change in how the permanent fund is managed or both state officials used the news to reiterate the need to adopt a plan that balances state spending with revenue.

It's a perfect time to examine again just what Alaskans pay in taxes.

Earlier this month, the Tax Foundation issued a special report on "Tax Freedom Day," the day when Americans have earned enough money to pay off their total tax bill for the year.

This year, Tax Freedom Day arrived April 11, the 101st day of the year. "Not since 1967 has the nation's total tax burden dropped to this level," noted the foundation, which takes into account taxes at all levels of government when determining Tax Freedom Day.

Tax Freedom Day for 2004 arrived three days earlier than last year's and 21 days earlier than in 2000, said the foundation, a nonprofit, nonpartisan research and public education organization that has monitored tax and fiscal activities at all levels of government since 1937.

How do Alaskans fare when it comes to Tax Freedom Day?

They marked the earliest freedom day in the nation March 26, more than two weeks before the national average. Alaska is the only state to have a Tax Freedom Day in March.

"For the past 14 years, Alaska's tax burden has been consistently ranked as the nation's lowest. Over this period of time, the burden has continued to fall as the individual incomes of taxpayers have risen faster than state-local tax collections. Estimated now at 6.3 percent of income, Alaska's state-local tax burden percentage remains firmly entrenched as the lowest nationally, well below the national average of 10 percent."

Alaskans who continue to think they still pay too much in taxes should consider the residents of Connecticut, who bear the nation's heaviest tax burden this year. Tax Freedom Day in that state will not arrive until April 28 this year. This year, the total per capita tax burden in Connecticut is $15,681; in Alaska, the total per capita tax bill is $8,542.

If that news, paired with results of Alaska polls which show Alaskans are willing to help the state bridge its budget gap by paying more taxes, doesn't help legislators make some tough decisions in the days to come, perhaps another bit of news will:

"Alaska taxpayers receive more federal funding per dollar of federal taxes paid compared to the average state," reports the Tax Foundation. "Per dollar of federal tax collected in 2002, Alaska citizens received approximately $1.91 in the way of federal spending. This ranks the state third highest nationally and represents a large rise from 1992 when Alaska received $1.26 per dollar of taxes in federal spending (then ranked at 14th highest nationally).

In other words, Alaskans get something for the federal taxes they pay.

Alaska's fiscal woes are not erased even with high oil prices. Those high prices should not be used as an excuse for legislative inaction. In at least three polls since January, Alaskans have indicated they are willing to pay some sort of statewide tax to help fill the budget gap. A national organization shows that Alaska's tax burden is the lightest in the nation.

What more do legislators need before they decide to act?



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