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10/31/2017
Fair taxation

EDITOR, Daily News:

Gov. Bill Walker is right to champion a broad-based tax, as the only alternative to new revenue is the continued depletion of our state’s savings and further cuts to education, public health, law enforcement, and infrastructure. However, it is essential that any broad-based tax be fairly distributed and take into consideration the sacrifices that ordinary Alaskans have already made with the halving of the PFD.

 Unfortunately, the governor’s tax proposal falls far short in these respects. The 1.5-percent wage and salary tax is capped at $147,000, so someone making a million dollars a year would pay a far smaller percentage of their income than someone making only $50,000 a year. This is especially obscene when one takes into account the reductions in the PFD, which proportionately impact low and middle income Alaskans more than they affect wealthy Alaskans. To put it simply, we’re close to establishing a system where those who make the least pay the most and those who make the most pay the least.

Thankfully, Rep. Dan Ortiz and the House Majority have recognized these grave inequities and are proposing an amendment removing the cap on incomes over $147,000 while also creating an exemption for those earning under $35,000 (they’ll pay a $75 flat-fee instead). Rich Alaskans would be meaningfully taxed, while those who have lost the greatest percentage of their incomes in the PFD reductions would receive relief. This change would be a huge step in the right direction.

But the governor’s proposal could still be improved further. First, if fiscally possible, the exemption should be higher, up to $50,000 or $60,000 a year. The PFD sacrifice of middle income Alaskans deserves recognition as well. Second, there needs to be a tax on investment income. America’s rich receive most of their income not from salaries but from returns on various financial instruments. So any tax system that limits itself to just wages and salaries is still a system where low and middle income people pay more in taxes on a percentage basis than the rich. As investment taxes would mean more revenue, this also would allow for a higher exemption.

GHERT ABBOTT

Ketchikan