October 18, 2015
Sunday PM

Representative Dan Ortiz, since you are asking for local input regarding state taxes; like you, last legislative session I watched the presentation of Mr. Teal, State Legislative Fiscal Analyst regarding the State deficit. I feel it is important for you to communicate to your constituents that even a whopping 10% State Income tax would only generate 100 million annually, or approximately 1/30th of the current budget deficit. The primary reason being that according to the State Department of Commerce, Community and Economic Development only about 300 thousand of the State's 750 thousand residents are considered gainfully employed. Further, approximately 47% of those gainfully employed pay no Federal Income taxes and under the proposed State income tax legislation would pay no State income taxes if instituted. In essence this means that an State Income tax would be paid by roughly 180 thousand, of the 750 thousand population base.

It is also expected that most of the out-of-state workers used as justification for an income tax (which is only a few thousand people BTW) would not make enough yearly money to tax (seasonal workers like cannery workers, bus drivers, etc). The majority of other out of state workers are military personnel who can simply change their home of record with their admin office and avoid 100% of any income tax. Others, can simply claim residency in an income tax free state such as Washington and visit Alaska as needed to check on business interests to avoid income taxes. An income tax also requires the hiring of additional state employees to implement as well as other employees to investigate violations and assure compliance. It is expected that an income tax will drive thousands of current retirees out of the state and convince other future ones that staying in Alaska is no longer economically feasible. An income tax will only cover a fraction of the current state debt wh
ile driving millions of dollars out of the state.

As a comparison, a 1% State sales tax would raise the same amount of money as a 10% income tax. People that champion for an income tax try to make the public support it by saying it will caputre income of out-of-state workers a classic tax the other guy approach. What is so disingenuous about this however is that an income tax would only affect a small percentage of the out of state workers for the reasons I mentioned above. In truth, the only tax that everyone would pay including all tourists (millions) and all out of state workers, is a sales tax. This is the primary reason that a 1% sales tax captures the same amount of money as a 10% income tax.

In closing, since all Alaskans benefit from State government, all Alaskans should contribute to the services they receive. The regressive argument some use against a sales tax ignores the fact that the poorest communities in the state already receive 100% free government services from the state. It is also worth noting that over 140 rural communities are exempt from the 5-year lifetime welfare limit imposed by Democratic President Clinton and can collect welfare for life in Alaska.

Please do not further divide the State with an income tax and instead unite us by requiring shared responsibility through taxation that we all share.

Sincerely,

Rodney Dial
Ketchikan, Alaska

Received October 17, 2015 - Published October 18, 2015

Wanted: Your Opinion By DAN ORTIZ
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