The great debate in Alaska over taxes sounds similar to the old question of whether it is less painful to yank off the bandage quickly or peel it off slowly.
I have found that it just doesn’t matter all that much how I pull off the bandage. Neither way is pleasant, especially when there is scab underneath.
It’s the same for taxes in tax-free Alaska: None of the options are pleasant; all will hurt at first; there are a lot of political scars and scabs that will break open no matter what tax is adopted, an income tax or a sales tax.
Regardless, the only way the state budget and public service wounds will ever heal is to stop picking at them. For that to happen, a majority of legislators and the governor need to agree on a real fiscal plan, not just talk of a plan or talk of getting together later to talk about a plan.
Until then, too many legislators and the governor are doing the equivalent of pulling back the bandage ever so slowly. Not even pulling it off, just peeling it back for a peak to see which of their constituents cry out the loudest.
To their credit, there are more tax proposals floating around the legislative pharmacy this year than in a long time. That’s good, actually very good. It’s the medicine Alaskans need to improve their communities and provide for a healthy future.
A growing number of lawmakers are doing the math and realizing the state is short of enough dependable revenue to fund quality schools, state troopers, social services, new roads, maintenance on what we already own and the necessary transition to renewable energy.
Without a real fiscal plan, and taxes, Alaska continues with self-inflicted cuts and shortages in public services. Even worse, paying for services by drawing down savings until they are gone is not a plan, it’s terminal.
But there is hope. A growing number of legislators are listening to constituents who are increasingly calling for a reasonable tax structure to ensure that the state can provide services in its communities and for its residents, particularly students.
After 44 years of tax-free life, more Alaskans are acknowledging that oil cannot pay for everything.
Some of the fiscal prescriptions on the legislative table include an income tax that would apply only to people making more than $200,000 a year. There is a proposal for a personal income tax that would be capped at the amount of each year’s Permanent Fund dividend, so that no Alaskan ever pays more in taxes they receive in the annual PFD. There is a proposal for a flat $30 tax on anyone earning money in Alaska, with the revenue intended — but not guaranteed — for school construction and repairs.
There is also an ill-conceived proposal for a state sales tax that would not exempt food, medicines or even funerals.
The need is apparent; the budget math is clear. Alaskans need to make a choice, pull off the bandage and pay something toward state services.