The Senate majority ... favors lower [Permanent Fund] dividends ... Senate leaders have said taxes would hurt Alaska's economy and aren't needed ....But the Senate isn't really concerned about the overall Alaska economy; if it was, its position would be the reverse.
According to a study from the University of Alaska-Anchorage's Institute of Social and Economic Research (ISER) last March, "the PFD cut ... has the largest adverse impact on the economy" of all of the so-called "new revenue" sources it analyzed, including sales, income (progressive and flat) and property taxes. If the Senate was truly concerned about the overall economy, cutting the PFD would be the last option taken, not the first, and certainly not ahead of taxes.
The Senate also isn't really concerned about Alaska families. According to a second study from ISER in early 2017, a "cut in PFDs would be by far the costliest measure for Alaska families." As in the earlier study, the analysis included also sales and income taxes. If the Senate was truly concerned about Alaska families, cutting the PFD would be the last option taken, not the first, and again, certainly not ahead of taxes.
The Senate also isn't really concerned about the amount of money Alaskans are required to pay to support government. As both the first and second ISER studies make clear, "[n]on-residents would pay a share of any of the potential taxes, reducing the burden on Alaska households." Because PFDs are only paid to residents, however, "the impact of the PFD cut falls almost exclusively on residents."
Using ISER's numbers we have estimated that Alaskans will be required to pay more than $500 million more overall under PFD cuts over 10 years than would be the case under any of the tax cases. Again, if the Senate was truly concerned about limiting the amount of money Alaskans are required to support government -- and optimizing contributions from non-residents receiving income in the state -- cutting the PFD would be the last option taken, not the first, and again, certainly not ahead of taxes.
So, if the Senate doesn't really care about the overall Alaska economy, Alaska families or limiting the amount of money Alaskans are required to pay overall to support government, what does it care about.
Put another way, just who is the Senate trying to protect by putting PFD cuts ahead of taxes.
To analyze that we compared the effect of PFD cuts with that of a flat tax on a family of four. We have previously discussed the type of flat tax we envision. ICYMI: Designing a Flat Tax (Sept. 2017).
To identify just who the Senate is trying to protect we calculated the crossover point at which a flat tax would take more from a typical family of four than the Senate's proposed PFD cuts.
Those below that point would fare better under a flat tax. Those above fare better under a PFD cut; as a result, they are the ones the Senate's actions are protecting. Our analysis is here (the crossover point by year is in the yellow column):
The answer was higher than even we guessed off the top of our head; roughly, those with incomes above $160,000-$170,000.
Only those receiving above that amount would pay more under a flat tax; all those receiving less than that amount lose more under the Senate's proposed PFD cut plan.
So, using a family of four as the measure, who is the Senate trying to protect?
The answer: families with incomes greater than $160,000 - $170,000, about the Top 10%.
At whose expense? Families earning less than $160,000 - $170,000 -- the Remaining 90%.
Let that sink in -- in order to save the Top 10% of Alaska families from paying a bit more under a flat tax, the Alaska Senate Majority is prepared to hurt the overall Alaska economy, the Remaining 90% of Alaska families, and make Alaskans pay more for government overall.
Just wow. Their upper income donors must be so proud. The Remaining 90% of Alaska families? Not so much.
The answer was higher than even we guessed off the top of our head; roughly, those with incomes above $160,000-$170,000.
Only those receiving above that amount would pay more under a flat tax; all those receiving less than that amount lose more under the Senate's proposed PFD cut plan.
So, using a family of four as the measure, who is the Senate trying to protect?
The answer: families with incomes greater than $160,000 - $170,000, about the Top 10%.
At whose expense? Families earning less than $160,000 - $170,000 -- the Remaining 90%.
Let that sink in -- in order to save the Top 10% of Alaska families from paying a bit more under a flat tax, the Alaska Senate Majority is prepared to hurt the overall Alaska economy, the Remaining 90% of Alaska families, and make Alaskans pay more for government overall.
Just wow. Their upper income donors must be so proud. The Remaining 90% of Alaska families? Not so much.
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