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State income tax is a sure way to hasten Alaska's economic decline

  • Author: Ross Bieling
  • Updated: June 26, 2016
  • Published February 23, 2016

Fellow Alaskans, we are all painfully aware that our state is experiencing severe economic ramifications from plunging oil prices in conjunction with bloated state government spending. Alaska lacks approximately two-thirds of the oil revenue required to support the state's $5.2 billion budget largess. Alaskans now seek leadership presenting a clear, unbiased vision offering solutions in order to prevent our economy from going from bad to worse.

The only options (after many closed-door discussions away from the public) for addressing this "financial crisis" on behalf of the citizens of Alaska have boiled down to a full-court press presenting either a sales in conjunction with an income tax, or a stand-alone income tax of six percent on one's federal tax return liability. It is clear that reducing state government's footprint within Alaska never made it to the table for meaningful deliberation. The needs of the few clearly outweigh the needs of the many!

As Travis Brown wrote recently in a Forbes.com commentary about Alaska -- a review of "An Inquiry into the Nature and Causes of the Wealth of States," which he co-wrote -- shows adopting an income tax spells disaster. Brown cites the fact that "each and every state (11 in total) that introduced the income tax since 1960 has experienced decline across a broad array of metrics." In terms of population, all 11 states have declined in comparison to the remaining 39 states." West Virginia experienced a population decline of 50 percent. The article identified Michigan as experiencing a decline in its gross state product of 57 percent. As Brown stated in his analysis, the wealth of various states, "The lesson is pretty basic -- if you don't currently have an income tax, do not adopt one." It has been 35 years since Alaska has eliminated the state income tax on its citizens. We have flourished economically over that period of time. Gov. Bill Walker's tax plan included seeking new taxes on fishing, mining, energy, along with an eye to tax tourism-related industries. In short, no industry is safe. My dog is guarding his food bowl 24/7.

Brown also cites the ALEC-Laffer State Economic Competitiveness Index, which reports, "The nine states without an income tax (including Alaska) significantly outperform their high-tax counterparts." Moreover, Brown says that "between 2004 and 2014, job growth in states without a personal income tax was 106 percent greater than high-tax states."

I propose another option. Gather a task force of Alaska business professionals from within private-sector industries with unique expertise in an array of business areas and let these good folks identify areas for cutting operational expenses, consolidation of personnel, and elimination of waste, fraud and abuse within each department of state government. An example of largess for consideration is Medicaid reimbursement for services where the state pays a lavish $1.26 for health care services to providers as compared to $1 for Medicare services. Reducing this Medicaid reimbursement to $1.16 would save the state of Alaska $200 million a year. Clearly, our Legislature should not be considering legislation on taxation until and unless all avenues of efficiency and all stones of opportunity are overturned. We got the largess of spending wrong; let's get the solution right. Many individuals speak of achieving a "right-sized government." I propose implementation of "common sense business solutions" to our crisis.

Walker and the Legislature should glean an important nugget from Brown's article: People vote with their feet and pocketbooks -- they just leave the state and do not return.

Ross Bieling is a lifelong Alaskan who was born in Ketchikan and now lives in Anchorage. An entrepreneur in the medical supply and services field, he is a candidate for the Alaska House of Representatives from District 28, the Anchorage Hillside.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary@alaskadispatch.com. Send submissions shorter than 200 words to letters@alaskadispatch.com or click here to submit via any web browser.

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