Alaskans, let's not slip into the tax cycle again

We all agree the state of Alaska is facing a fiscal crisis that could bring down our economy if we don't act soon. Some combination of cutting services, raising additional income from natural resources and/or raising money from Alaskans is the only solution. But let's not lose sight of the forest for the trees.

Economist Roger Marks was right on the money in his Jan. 17 opinion piece in ADN. The idea that we would create another state bureaucratic system to collect taxes in order to pay ourselves the dividend seems terribly inefficient.

State income taxes take countless forms in this country and who knows how it will look by the time our Legislature finishes debating it. If the tax is 3 percent, an individual earning $40,000 after deductions would pay $1,200 to the state and then receive $1,000 back in the form of a dividend.

Taking this example one step further, if the dividend reaches $2,000, an individual would have to earn more than $66,000 to pay more taxes than you would get back in a dividend. A family of 4 would have to earn over $266,000 to pay more tax than they would get back from the dividend.

In essence, many Alaskans won't be paying any income tax after receiving the dividend. It makes little sense to create another state bureaucracy in order to collect a tax just to give it back.

For the income tax to be effective in adding real revenue for the state, the rate would need to be much higher than 3 percent. This tax will fall squarely on the middle class, since the poor and the very rich will pay little or nothing.

Many say that the loss of the PFD program will disproportionately hurt the poorest among us. That does not have to be the case at all. We have a way of protecting the poor and those who need our collective help: Our state government.

[Deficit-reduction plan from House majority uses income taxes and Permanent Fund earnings]

It makes more sense to use Permanent Fund earnings to fund our state government and allow our elected representatives to determine how to allocate the funds. They have the option, ability and obligation to strengthen our statewide safety net for the disabled and the poor.

Working though our existing system and laws, our Legislature and governor can direct aid to families and individuals that truly need and qualify for assistance, rather than blindly handing out $1,000 to every resident of the state. In fact, use of the dividend could be tied directly to these social needs by law.

With all due respect to the good folks of the "Permanent Fund Defenders," if we don't use the dividend, we will have to raise revenue or cut government. The governor says there is little room left to cut, our current Legislature has found it nearly impossible to raise taxes on the oil industry, which only leaves taxing the middle class.

I have enjoyed and been in favor of the PFD since it's inception. I agree with the "Defenders" in principle, but this great idea has met the end of its practical life.  Much of the dividend is now spent in box stores or on the internet, where Alaskans see little if any economic or social benefit.

The long lines at Costco and Wal-Mart on PFD day demonstrate how much of the dividend is sent straight out of state the very next day.

As a state we can spend this money more efficiently and have the moral obligation to do so. If we ever return to huge surpluses in our budget, nothing prevents us from re-establishing payments to the people.

The state's use of Permanent Fund earnings could indeed be temporary and could have a sunset clause. But have no illusions, paying citizens cash every year is a luxury reserved for very wealthy states that can afford their state bureaucracy, which we cannot at the present time.

I think politicians will find when faced with a choice of losing our PFD or being saddled with an income tax, many Alaskans would choose the former. We should fully use the sources of income we already have and try to live within our means before we begin the neverending cycle of tax increases.

Once that door opens, it will never be shut again.

John Staser is co-owner and manager of Mountain View Sports in Anchorage.

The views expressed here are the writer's and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary@alaskadispatch.com. Send submissions shorter than 200 words to letters@alaskadispatch.com.