A co-creator of Alaska’s PFD program is calling for reinstating a personal income tax (Anchorage: sales, credit)

[AKStafford]

https://www.ktoo.org/2023/11/09/a-co...al-income-tax/

That Alaska’s fiscal system is broken is probably most obvious to the people who helped create it. Two civic organizations in Sitka recently heard from a co-author of the Alaska Permanent Fund dividend, who’s on a mission to set the state’s finances right.

State Rep. Cliff Groh was a 28-year old legislative aide in 1982 when he helped draft the legislation establishing the Alaska Permanent Fund Dividend. He’s worked in and out of government since then — he now represents House District 18 in North Anchorage as a Democrat.

Groh recently returned to Sitka to visit with old friends and share his ideas about Alaska’s fiscal problems with the local Rotary and Chamber of Commerce on Oct. 25.

Fellow House member Rebecca Himschoot, an Independent representing Sitka, Petersburg, and many surrounding communities, participates in the minority caucus with Groh. She said that among their very diverse caucus, Groh has earned a nickname.

“The expertise that Cliff brings to the table, well he’s actually earned a nickname,” said Himschoot. “He’s the ‘Fiscal Cliff.’ So we talk a lot about our fiscal cliff here in Alaska, and he really, truly is literally, our Fiscal Cliff. So he’s going to share some of those ideas that he has with us today – not even just ideas – but facts and figures about where we are and how we got there. And some ideas for how things might be different in the future.”

Groh’s vision for the future is basically a return to the past, and to the strategies that a bankrupt Territory of Alaska used to shore up its finances and win statehood. The territory relied on revenues from fishing and mining in those days, and was crippled by deficits. In 1948, territorial voters threw out almost the entire Legislature — and brought in new people with a purpose.

“And the new legislators came in, and in an eleven-day period they passed five taxes in a special session before the regular session started in January of 1949,” Groh said. “And the biggest one by far, and the one that’s had the most consequence in terms of revenues, was the first personal income tax in Alaska.”

That income tax was repealed in 1980, shortly after the completion of the trans-Alaska pipeline. Groh says that was the beginning of the “Alaska Disconnect” — when Alaskans began to expect not just an annual dividend check, but also free government in perpetuity.

Groh says that strategy worked pretty well for about 35 years. But now that oil revenues have peaked and are on a steady decline, without an income tax there’s no way to scale Alaska’s revenues to the population.

He asked the Sitka Chamber of Commerce to conduct a thought experiment, and to imagine Alaska’s population doubling.

“What would happen to government services?” Groh asked. “Well, the roads would ‘go south’ and like I said, they’re already terrible in my district. I have to say, driving around Sitka right now, they’re not exactly perfect here either. And obviously the state ferries, which used to run a lot more when I lived here more than 15 years ago, that would decline. We would need more school facilities and teachers, or face worse outcomes. Our dividends get smaller. And public health and safety resources like troopers, firefighters, and public health nurses would be stretched thin. And actually all the state services would either require more investment or the quality would suffer. So let’s talk about what happened to state revenue if the population doubled. It would be about the same as it is now. So we need to understand that.”

Just 10 years ago, Groh’s might have been a lone voice in the wilderness, but Alaska has since burned through billions in savings. While the principal of the Permanent Fund itself can’t be touched, another account called the earnings reserve can be spent with just a majority vote of the Legislature — and then Alaska would have no operating cash at all. So now many of Groh’s colleagues are also talking about taxes: a state sales tax, an income tax or both.

Groh has introduced HB 156, which would impose a 2% income tax — but only on earnings above $200,000. Anyone earning less than $200,000 would just “chip-in” $20.

He’s not keen on a sales tax.

“Some other legislators favor a sales tax — one was introduced this year,” Groh said. “It was a very broad sales tax. And then I said, ‘Folks, before we start taxing groceries and feminine products, I’d rather tax millionaires first.”

Asked by a chamber member whether Permanent Fund dividends should be discontinued, Groh said he didn’t think that would solve the Alaska Disconnect, although he did support restructuring the dividend and protecting the fund itself with a constitutional amendment. And he also did not support a strategy used by many governments, including the federal government: deficit spending.

“We can’t borrow our way out of this problem,” Groh said.

[Northrick]

This year the state handed out $881 million in "free" money - the PFD. Before we start talking about and income or state-wide sales tax, we need to stop doing that.


In addition, we significantly under tax oil revenue compared to the rest of the oil producing regions in the world. The $8 per barrel tax credit needs to go. Just those two changes would keep the Alaska government fiances in the black for years before needing to establish a broad-based tax.

[Czechsix]

Tax his land, Tax his bed, Tax the table at which he's fed.

Tax his tractor, Tax his mule, Teach him taxes are the rule.

Tax his work, Tax his pay, He works for peanuts anyway!

Tax his cow, Tax his goat, Tax his pants, Tax his coat. Tax his ties, Tax his shirt, Tax his work, Tax his dirt.

Tax his tobacco, Tax his drink, Tax him if he tries to think.

Tax his cigars, Tax his beers, If he cries tax his tears.

Tax his car, Tax his gas, Find other ways to tax his ass.

Tax all he has, Then let him know, That you won't be done till he has no dough.

When he screams and hollers, Then tax him some more, Tax him till he's good and sore.

Then tax his coffin, Tax his grave, Tax the sod in which he's laid.

Put these words Upon his tomb, 'Taxes drove me to my doom...'

When he's gone, Do not relax, Its time to apply the inheritance tax.

[Metlakatla]

Alaska doesn't have an inheritance tax. Or most of the others mentioned.

Someone has to pay for stuff, by the way. Oil isn't going to support Alaska forever.

[terracore]

"Groh has introduced HB 156, which would impose a 2% income tax — but only on earnings above $200,000. Anyone earning less than $200,000 would just “chip-in” $20."

For somebody who has worked in and out of government his whole life, he doesn't seem to have a grasp of what the bureaucracy costs. It would cost government at least $20 per taxpayer to audit who has paid their $20, and probably much more than that.

The problem with any new income tax, well... tax in general is that they promise "it's only 2%" and "only above $200k" and they never stick to it. 2% goes up and $200k goes down. It seems bizarre to me that they want to keep PFD money going out and invent a new bureaucracy to bring some of that back in. The fiscal "haircut" for increasing the government to make this happen makes no sense, not to mention the collective wasted time of 800,000 taxpayers having to file this new tax, burden on employers, etc.

Keep it simple, stupid.

[Arktikos]

Originally Posted by Northrick

This year the state handed out $881 million in "free" money - the PFD. Before we start talking about and income or state-wide sales tax, we need to stop doing that.


In addition, we significantly under tax oil revenue compared to the rest of the oil producing regions in the world. The $8 per barrel tax credit needs to go. Just those two changes would keep the Alaska government fiances in the black for years before needing to establish a broad-based tax.

All of the above. Someone in government needs to be bold with a proposal to abolish the PFD.

[Metlakatla]

Originally Posted by Arktikos

All of the above. Someone in government needs to be bold with a proposal to abolish the PFD.

The electorate has to be smart enough to elect them in the first place, and that ship sailed and sunk years ago.

Anyone currently in office who dares to speak a word against the PFD will promptly be voted out by Alaska
s "fiercely independent" citizens.

[riceme]

Originally Posted by Northrick

This year the state handed out $881 million in "free" money - the PFD. Before we start talking about and income or state-wide sales tax, we need to stop doing that.


In addition, we significantly under tax oil revenue compared to the rest of the oil producing regions in the world. The $8 per barrel tax credit needs to go. Just those two changes would keep the Alaska government fiances in the black for years before needing to establish a broad-based tax.

But don't you see?? If we continue the PFD AND implement an income tax, then we can create more government..., I mean, JOBS for all the additional workforce that will be required to tax the people!

[Mister Torgue]

Originally Posted by Czechsix

Tax his land, Tax his bed, Tax the table at which he's fed.

Tax his tractor, Tax his mule, Teach him taxes are the rule.

Tax his work, Tax his pay, He works for peanuts anyway!

Tax his cow, Tax his goat, Tax his pants, Tax his coat. Tax his ties, Tax his shirt, Tax his work, Tax his dirt.

Tax his tobacco, Tax his drink, Tax him if he tries to think.

Tax his cigars, Tax his beers, If he cries tax his tears.

Tax his car, Tax his gas, Find other ways to tax his ass.

Tax all he has, Then let him know, That you won't be done till he has no dough.

When he screams and hollers, Then tax him some more, Tax him till he's good and sore.

Then tax his coffin, Tax his grave, Tax the sod in which he's laid.

Put these words Upon his tomb, 'Taxes drove me to my doom...'

When he's gone, Do not relax, Its time to apply the inheritance tax.

This is brilliance.

[Crossfire600]

They will **** away the PFD and they will **** away taxes.. they can't live within their means so there is no long term solution until they realize that money doesn't grow on trees and more importantly it shouldn't by votes.