Let’s be blunt. I am a 29-year-old Anchorage resident earning a six-figure income. I was not born here, but words can’t describe how the Last Frontier has hooked me and given me a life I could never have dreamed of. I moved here in 2012 and fully intend to spend the rest of my life here and leave the state better than I found it. Right now, leaving the state better than I found it demands speaking out.
Every year, I pay $3,000 in property taxes and $100 to register my vehicle. I have a $29 sport fishing license and a $50 State Parks parking pass. Let’s say I get a $1,500 PFD. That means that Alaska gets about $1,700 from me per year, less than 2% of my income. Anchorage alone spends $1,700 on each city resident per year, which is on the cheap end of what all U.S. cities with more than 200,000 residents budget. So right now I am “just” a net-zero contributor to state services. Not expecting a young professional to contribute more than he takes out is absurd in itself, but consider that if a $3,000 PFD is issued, it means I am a net drain on the state of Alaska, despite being one of those fortunate enough to be able to carry the biggest load. That is jaw-dropping. Inexcusable.
Tax me. Right now, lawmakers are cutting care to the vulnerable and hamstringing the education of the next generation while complaining that Alaska is broke, but that is willful blindness.
Fair taxation involves putting the biggest burden on the strongest shoulders. Property taxes are not the right way. A retired homeowner living on savings does not have an income, but does have property; higher property taxes place a burden on them at the point where they’ve earned the right to sit back.
An income tax places the burden where it belongs: on the shoulders of the least vulnerable. But for a state like Alaska with a huge income disparity, a flat income tax is not the right way because the impact is felt most at lower incomes. Imagine a flat 10% income tax. The person earning $500,000 per year does not change their lifestyle to cut back to $450,000 per year. The person earning $100,000 a year might skip a vacation to cut back to $90,000. The person earning $40,000 has to wonder how they can pay for housing or food on $36,000.
So a progressive income tax is the right path forward. There are many ways to implement one, but one of the most sensible suggestions I have heard is as a fixed percentage of federal taxes, which avoids the need for a duplicated state-level tax code and bureaucracy.
Those who argue that taxes should remain low and be made up by charitable giving know that if human nature worked that way, we would not need this conversation. Even in a perfect world, where everyone donates what they might have been taxed, just imagine the inefficiency of 700,000 uncoordinated individuals deciding how to allocate their money each year to a bunch of charities that each need their own accountants and bureaucracy and have no idea what their budget might be from year to year. The sewers would be collapsing and the puppy surgery ward would have gold scalpels.
Others argue that there should be no extra taxation until all the waste is cut. No natural, mechanical or human process is 100% efficient, so that is unrealistic and will be an eternal excuse. Yes, there are undoubtedly places to trim the fat and we should constantly look for those. However, even in the fattest years, with every dollar spent perfectly, a financially secure private citizen should still be expected to contribute to enable an Alaska with a bright future. And these are not the fat, carefree years. Our government is cutting the university, psychiatric care and retirement homes while a healthy 29-year-old engineer is allowed to make a net negative contribution.
Finally, we’re not talking about socialism or excessive rates. If I moved back to Oklahoma, which no one can call a bastion of liberalism or taxation, I would pay $6,400 per year in state and local taxes to lead a similar lifestyle … with the downgrade of having to live in Oklahoma. We are talking about the cost of living in an enlightened civilization, and the principle that the strong should shoulder the largest burden with the trust that society will care for them when they grow weak.
Gerrit Verbeek is a 29-year-old petroleum engineer in Anchorage.
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