SitNews - Stories in the News - Ketchikan, Alaska


By Dustin Hofeling


February 05, 2009
Thursday PM

This is in response to Mr. Carro's assessment of sales taxes in Ketchikan. I agree wholeheartedly with his assessments. Taxation is necessary to pay for road maintenance, utility lines, etc. We simply cannot go without taxes. However the idea of raising taxes is a death spiral. As more money comes in, the government will spend more, which requires more money, which induces more spending. It is hard for the government (or any other entity) to get out of such a chain of events.

One of the axioms of business is after-tax incremental cash flows are what matter. In other words, when analyzing projects, businesses will examine them after-taxes to determine which ones have the highest incremental cash flows, net present value, ROI, etc. And it is very easy to set up legal tax shields with such mechanisms as double-declining depreciation.

As consumers our only real defense against taxes is to follow the example of the business world. It is possible to minimize the tax bill legally. But it takes planning and preparation that can span multiple years.

The federal government is in desperate need of money right now, and it will probably continue issuing bonds for some time to come. However, in Ketchikan is it really necessary to have two layers of government? It seems that this creates a lot of overhead and direct costs. Surely such a small island with such a small population doesn't need the oversight of two competing government entities.

Now is the time to lower the sales tax. The borough and city need to find ways to lower costs. I commend the recent activities of the city to reign in costs. This should be an ongoing effort, both during the good and bad times. Ketchikan residents recently rallied together to lower the cost of fuel. Let us again rally together to lower the sales tax. Ketchikan is Alaska's First City, not Alaska's Sales Tax Capital.

Dustin Hofeling
Ketchikan, AK


Received February04 , 2009 - Published February 05, 2009


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