All that the Supreme Court decided was that he could. None of our arguments ever have been predicated on that. Instead, our focus throughout has been on whether, as an economic and policy matter, he (or the legislature) should reduce the PFD.
That debate stays the same, and we believe continues to weigh heavily on the side of continuing to keep the PFD as it was envisioned by Governor Hammond, the other founders, and is currently provided by statute.
One of the defining characteristics of the current fiscal debate is that it is composed mostly of this group or that trying to shove the the burden of paying for elevated government spending off on someone else.
Some, primarily from the Top 20% by income and centered in the Senate, favor deep cuts to the PFD, which shoves most of that burden onto the backs of the remaining 80%.
The reason they favor that is because they think the alternative is likely either a progressive income tax, which would shove a large share of the responsibility onto them, or an increase in oil taxes, from which a material share of the Top 20% either directly or indirectly derive their income. The Top 20%'s proposal to cut the PFD is largely a preemptive strike against both. (The same is true of their back up proposal of a statewide sales tax, which has a less, but still significant, disproportionate impact on the "other" 80%).
And there is some truth to their concern. Both a progressive income tax and an oil tax are prominent components of the House Majority Coalition's approach, for the very purpose of shoving a significant share of the burden of paying for government off on the Top 20% and the oil industry.
Our problem with both sets of proposals has been and remains that, along the way of preemptively protecting their favored group they do significant collateral damage to the overall Alaska economy and Alaska families.
As we have discussed previously on these pages, the Senate's proposed preemptive strike, a deep PFD cut: 1) "has the largest adverse impact on the economy [of all the new revenue options] per dollar of revenues raised," https://goo.gl/ZxR1Hw at A-15; 2) is "by far the costliest measure for Alaska families," https://goo.gl/ivf9D2 at 1; and 3) "will likely increase the number of Alaskans below the poverty line by 12-15,000 (2% of Alaskans)," https://goo.gl/iuTjv2 at 14. (A sales tax is second only to a PFD cut in terms of its adverse impact on Alaska families.)
Conversely, we agree that trying to shove the bulk of the burden mostly onto the Top 20% through a progressive income tax and/or the oil industry through increased, above-market oil taxes also do significant collateral damage. By (potentially, significantly) increasing the cost of doing business in Alaska, at least to some extent the proposals will have the effect of pushing out of Alaska and to lower cost locations both individuals and businesses in the Top 20%, as well as industry investment that is needed for new oil projects.
From that perspective, we view both approaches as simply the flip sides of the same coin. Both seek to benefit one group of Alaskans at the expense of another, and both result in collateral damage to the overall economy which neither side seems to care much about in their drive to protect their group from the other.
That is the reason, over time, we have come to favor -- if, in fact, the government is going to pursue some source of so-called "new revenue" -- a "flat tax," one which collects the same amount (as a percent of income) from all Alaskans regardless of their income bracket.
In our view a flat tax results in as close to an "economically and family neutral" approach as possible.
Under a flat tax all Alaskans experience the same, proportional effects from elevated government spending levels. Unlike both the Senate and House proposals, no one population segment -- or family -- is asked to give to government a greater share of its income so that another segment gets off with less. All Alaskans also benefit from a lower rate of government take as a result of distributing the burden across as broad a revenue base as possible.
And a side, but nevertheless important benefit of the approach is that all Alaskans have an equally proportionate stake in and reason to support the lowest possible level of government take. No one group economically is positioned to avoid the consequences of elevated government spending, leading them to favor -- or remain indifferent to -- further additions because they are paid for by someone else.
As we have said repeatedly on these pages, we don't believe any of these "tax and spend" approaches -- PFD cut, income tax, oil tax or even flat tax -- are necessary. Instead, we believe using the Hammond 50/50 approach Alaska is well positioned to ride out the current low in the oil price cycle without self-inflicting any further damage on its economy. See "The Special Session version of “Implementing Governor Hammond’s 50/50 Plan," https://goo.gl/nE15Eo.
But, as we also have said repeatedly if as a state we nevertheless are headed down the road of generating so-called "new revenue" it should be done with the least damage and disproportionate effects possible. We believe that replacing both the Senate and House proposals (both the PFD cut and income tax components) with a single rate flat tax -- a tax that imposes an equal distributional burden regardless of income class -- does exactly that.
If government is going to make Alaska's economic situation worse by pulling money out of the private sector and respending it less efficiently through government, at least the burden of the mistake should be spread proportionately across Alaska's families, not concentrated on any one sector.
And today's Supreme Court decision doesn't change anything in that analysis, at all.
No comments:
Post a Comment