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Viewpoints: Letters / Opinions

The Three Components of the PFD Tax

By Ghert Abbott


July 17, 2018
Tuesday PM

The PFD tax that the state government has imposed on Alaskans is composed of three components. The first is the $1,000 dollar head tax that is taken directly out your Dividend. This is a quintessentially regressive tax – working and middle class people pay a far greater portion of their total income to the state then the rich, who pay practically nothing. This is perhaps the worst system of revenue the state could have devised and enacted. It penalizes families, taxing them higher then single individuals. It hurts young people trying to make a start and save for their future. It burdens retirees trying to live on a fixed income. Its regressiveness also discriminates against small, rural communities, such as Ketchikan, where the cost of living is higher. This results in wealth, population, and power further being concentrated in Anchorage and the rail-belt.

The second component is the state taking and spending the money that otherwise would have been reinvested into further growing the Permanent Fund. Since the Permanent Fund’s inception, its earnings have been underdrawn in order for the Fund to expand. This is why the average PFD has steadily increased over the past 38 years. By taking the investment money, the state is freezing the Fund’s value, depriving you of the benefits of its future growth. This component is much more insidious then the direct tax on the PFD, as the money is effectively coming out of your future dividends.

The third component is the state’s failure to adequately inflation proof the Fund. The Permanent Fund Corporation warned the legislature that the current 5.25% draw has a 50% chance of causing the Permanent Fund to lose value in the event of a market correction. For the Fund to be adequately inflation proofed, the budget deficit would either have to be larger or the PFD smaller. The state legislature’s failure to inflation proof the Fund is yet another way that the full costs are being hidden from Alaskans. As with the freeze on investment, any loss in the Fund’s value will be felt well off into the future.

Ghert Abbott
Ketchikan, Alaska

About: Ghert Abbott was born in Ketchikan in 1986 and is a graduate of Ketchikan High School and the University of Alaska Southeast-Ketchikan. He is the Democratic candidate for House District 36’s legislative seat.

Editor's Note:

The Alaska Primary Election is August 21, 2018.
The Alaska General Election is November 06, 2018

Upcoming Deadline: July 22nd is the deadline for voters to register to vote  

The text of this letter was NOT edited by the SitNews Editor.


Received July 16, 2018 - Published July 17, 2018

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