The Governor’s Tax Proposal: A Free Ride for the Rich
By Ghert Abbott
January 13, 2018
Under the governor’s proposal, the average Ketchikan household will be paying a state tax on practically everything they earn. In contrast, the average top 1% household will only be paying a tax on the PFD and the first $150,000 of their salary – which translates to more than a million dollars tax free, assuming all the income is from salary. The payroll tax + PFD tax would therefore cost the average Ketchikan household 3.4% of their yearly income, while only costing the millionaire household a mere 0.25% of its yearly income. If the millionaire household received all its money from stocks and bonds, it would only pay the PFD tax: a microscopic 0.08% of its income!
Further adding to the inequality inherent in the governor’s proposal, the average Ketchikan household naturally pays a far higher percentage of their income in regressive local sales taxes than a millionaire household. Finally, the top 1% of Alaskans are about to receive an enormous and permanent tax windfall from the Federal government, while most Alaskans are scheduled for a permanent Federal tax increase in 2025. We are threatened with a system where those who make the least pay the most and those who make the most pay the least.
To avoid such a system requires progressive taxation. We need progressive income and capital gains taxes that will ensure that Alaska’s top 1% pay their fair share. A capital gains tax in particular is essential, as the wealthy, unlike ordinary people, make most of their income from returns on investments, not wages or salaries. Stock ownership is incredibly unequal in this country and so a failure to tax capital gains gives a massive free ride to the rich. The top 1% owns 53% of all stocks. The next 9% owns 40% of the stock. As for the remaining 90% of Americans? We own just 7% of stock, most of this indirectly through retirement accounts (which can and should be protected from state taxation). Making the rich pay their fair share is why 41 states and the District of Colombia have a capital gains tax, ranging from as low as 3% to as high as 13.3% (the highest being California). By taxing the rich, we can reduce the tax burden of ordinary Alaskans and fairly distribute the burden of supporting essential state services.
About: Ghert Abbott was born in Ketchikan in 1986. He is a graduate of Ketchikan High School and the University of Alaska Southeast-Ketchikan.
Received January 10, 2017 - Published January 13, 2018
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