Alaska residents carry lightest tax burden in nation

Posted: Friday, April 25, 2003

As policy-makers at every level of government consider new ways to raise revenue, cut services and, in general, make ends meet, Alaskans should consider the following from the Tax Foundation:

"Residents of Alaska will bear the lowest average tax burden in 2003. This year the total per capita tax bill comes to $8,109. Therefore, the average resident of Alaska can expect to devote all income earned during the first 89 days of 2003 (until March 30) to paying taxes the only state in the union to have a Tax Freedom Day in the month of March."

The Tax Foundation defines Tax Freedom Day as the day when Americans earn enough money to pay off their total tax bill for the year. For most of the country, that day fell April 19; but for other states the day is still days away. Connecticut, for example, will bear the nation's heaviest tax burden this year with residents paying $15,782 per capita. Residents of the Constitution State don't celebrate Tax Freedom Day until May 9. Residents of Massachusetts don't fare much better. The tax burden in that state is $13,887 per capita, and Tax Freedom Day arrives May 2.

It's worth noting that not only does Alaska have the earliest Tax Freedom Day in the nation, but it also has the lowest state and local tax burden in the nation.

Alaskans may view their tax bill as exorbitant after all, no one really thinks their tax bill is too low or their paycheck too high but it's clear Alaskans are not paying as much in taxes as their friends and relatives in other states. Plus, other states don't issue their residents money in the form of permanent fund dividends.

It's ironic that while state and local policy-makers seem almost afraid to even utter the "t" word much less implement policies that will mean higher taxes for their constituents Alaskans seem much less wary of new taxes.

When members of Gov. Frank Murkowski's budget team visited the Kenai Peninsula recently, at least some residents suggested a statewide income tax might be a lot less painful than cuts to state services and preferred over other revenue-raising measures.

As local governments, particularly the city of Kenai, deal with the difficult decision as to what to cut, one has to wonder if a hike in property taxes might be the best answer.

Maybe it's worth pursuing a Pennsylvania lawmaker's idea. In lieu of raising taxes in a weak economy, Rep. Jeff Coleman has proposed a "Tax Me More Fund" that would rely on donations from taxpayers.

Coleman's bill is modeled after a fund established by Arkansas Gov. Mike Huckabee in November 2001.

The Associated Press reported earlier this month at Huckabee's Tax Me More Fund'' was a response to legislators who insisted that tax increases or other measures were needed to offset $142 million in budget cuts. So far, it has taken in between $2,000 and $3,000.

OK, so maybe, it really is the thought that counts.

Still, the question that Alaskans must come to grips with, preferably sooner rather than later, is: Are they willing to put the quality of life they now enjoy in jeopardy by their refusal to pay for some of the state services they receive?

And if new taxes aren't the answer, what is?

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