State income tax best way to raise more revenue

Posted: Thursday, May 06, 2004

A statewide sales tax is the worst possible choice for more state revenue. It is regressive and would hit resident Alaskans the hardest.

Furthermore, since many boroughs and cities already have sales taxes in place, it would place an even greater burden on resident Alaskans. The only more regressive proposal is the $100 "education" tax.

An income tax is the best way to go. Currently the legions of out-of-state workers take the money and run. They use state services and pay nothing in return. This includes oil field workers, commercial fishers (including guides), tourism workers, legions of consultants and others.

An income tax could be tailored to give credits and exemptions to either Alaska residents or out-of-state workers who could legally take advantage of the available credits and exemptions.

The biggest problem facing Alaska is the inability of the Legislature and the governor to come up with an honest orderly plan to downsize state government and state-funded entities and programs. Any tax implemented now without honest orderly downsizing merely guarantees that when the budget crash and burn occurs it will be far worse.

If more money is available to spend it will be spent. Legions of beneficiaries of state funds will have legions of lobbyists in Juneau and in your home districts hounding you for more. Are they not already doing this? Even when we're running deficits?

Anyone who claims spending has been effectively cut has no real understanding of bureaucracies and how and why they grow and grow.

Anyone who expects across-the-board percentage budget cuts to reduce government definitely does not understand bureaucracies.

Anyone who expects any state agency to honestly and orderly downsize itself does not understand the rationale of the state salary system.

One agency did try to downsize. It was done in an orderly manner. The public screamed in some locations. Their legislators loudly complained to the governor. The governor issued a wishy-washy statement and ordered the proposed downsizing stopped and issued a patronizing statement about the head of that agency.

After that do you really expect anyone else to stick out their necks to get them chopped off?

The non-oil economy of Alaska cannot support the state government, state-funded entities and state-funded programs that plentiful oil money built. We're not even meeting current spending levels. In the near future, even if you used all the earnings of the permanent fund, it would still require a crushing tax burden to finance steadily expanding state expenditures.

Of course, it will happen on somebody else's watch so who cares about the future?

William J. Phillips


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