By now we’ve all heard and seen the One Alaska campaign ads against Proposition 1. Proposition 1 is designed to undo the harmful effects of Senate Bill 21, passed several years ago, which has had the effect of reducing Alaska’s income from its legacy fields to near zero. The ads, sponsored by the oil companies, claim that it is a terrible time to tax the oil companies.
Four things: First, Alaskans acknowledge that wealth from the oil sector has paid the cost of state government and the public goods the state creates — schools, roads, police, justice system, income support in the form of welfare and the Permanent Fund dividend, etc. — for the past 40 years.
Second, having spent down our easily accessible savings, we lack the needed shock absorber to our state’s fiscal needs should there be, for example, a break in the pipeline, a drastic drop in the world price of oil, or a crash of the stock market — all things that we have experienced, two of them recently.
Third, a growing number of Alaskans understand that the days of Alaskans being free of the duty of a state individual income tax are over. But even a tax which constitutes 20% or 25% of the individual’s federal income tax liability will only generate something on the order of $750 million to $1 billion. But we must step up and pay to support the kind of community that we can be proud of.
Fourth, there is no “good time” to institute taxes. Taxes are imposed because that is how organized societies pay common costs for the common good. Our tax holiday was a foolish mistake in the first place, and that we haven’t acted sooner in our common interest is, frankly, shameful.
The fact is, Alaskans must be and are grateful for the partnership they have had with the oil industry. But it is time for the oil industry, too, to step up and start paying a higher percentage — a fair share — of profits to the community in which they make their living. We should vote yes on Proposition 1.
— Peter A. Michalski
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