Apparently, the quaint notion of further trimming government appreciably to better balance the state’s finances is out the window as far as the House coalition of Democrats and its three Republican pals are concerned. The only thing they are willing to cut is working Alaskans’ pay.
While lawmakers in Juneau wrestle with a more than $3 billion budget deficit, they are moving the discussion toward an income tax, but let us call it what it really is – a pay cut for every productive Alaskan. And it is a pay cut that never, ever, will go away; only get deeper and more painful in coming years.
The pay cut would, if passed, amount to 15 percent of your federal tax liability. If you make about $150,000 in gross income and ante up about $20,000 to the feds, your pay cut would be an additional $3,000 or so. There also is a provision to levy a 10 percent tax on capital gains. The pay cut would garner the state about $220 million.
The big government cabal also would let you pay for your pay cut with your Permanent Fund dividend. How very transparent. What this bunch really wants is for you to lose your dividend completely as the pay cut increases and your dividend shrinks. The dividend eventually will go; the pay would stay on the books and grow.
A piece by retired state Sen. Gary Wilken of Fairbanks tells what needs be told about an income tax. You can read it here. It knocks holes in almost every argument supporting such a levy.
Alaska is one of only seven states that do not impose a state income tax – Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming – and the only state to have repealed an income tax. A Libertarian ballot initiative to repeal the levy scared legislators into doing the seemingly impossible in 1980.
What they repealed was a far cry from what it was when it started. Alaska initially adopted a state income tax 10 years before statehood, in 1949. The levy imposed on Alaskans a pay cut of 10 percent of their federal income tax liability. The rate by 1961 had climbed to 16 percent. The state in 1975 switched to a graduated tax rate structure independent of federal income tax rates.
Democrats and their Republican chums in the House are beholden to state employee unions and would rather retain government at its current levels than do what you would have to logically do if your income dropped.
To keep government at its current level they are more than willing to hand you the bill.
We get the government we tolerate.