Wednesday, January 27, 2016

Senate Majority Poll Finds 48% Of Survey Takers Support A State Income Tax at 25% Of Federal Income Tax

When I got the email survey last week from the Senate Majority, my eyebrows went up a bit when I saw that their income tax question pegged the tax at 25% of the federal income tax.  I'd just heard the governor's state of the state address where he proposed a 1% level.

Surely, this was meant to suppress the income tax support, I thought.  And today's ADN had a commentary by Dermot Cole making that same point.

And now I got an email with the results of the poll.  I checked the question on income tax first.  Even at 25% of the federal tax, 49% responded positively!  That must be a surprise to the Senate majority.

Click to focus 

There are several full blog posts to write about here.

1.  About the governor's state of the state address - which I thought was a refreshingly clear, straightforward, and honest outlining of the situation.  He laid it all out.  This much is our gap.  We can:

  • Cut
  • Use Permanent Fund and Other Reserves
  • Raise New Revenue

He pointed out that cutting all state employees wouldn't put much of a dent into the deficit.  For some people, shutting down government is the only way they will start to see all the things they depend on the state government for.  Immediate impacts will be no state troopers, no snow plowing or other road maintenance, prisoners would all starve in their cells or have to be released.  You think you'd have trouble flying because Alaska hasn't adopted real ID drivers' licenses, wait until we have no licenses at all, or license plates.  What will the Canadian border folks do with all our out of date plates trying to go through?  The airports would shut down.  Then there are things that will take longer to happen - people will start getting sick from things like bad water.  But that's another post.

The governor offered some options - what he wanted from the Permanent Fund (no limits, but the dividend would come off oil royalties, not investment earnings as I understood the speech), what size income tax (1% of Federal), and no sales tax.  He explained why he made the choices he did - income tax would capture those who were not residents of Alaska but worked here and sales tax is local government's way to raise money and he didn't want to add a state sales tax on top of the local taxes.

And then he said he wasn't set on the specific options, but he was set on the outcome.  He got the biggest applause when he said, "I will always put Alaska’s future above my own.  I didn’t run for gov to keep the job, but to do the job."

2.  About the different revenue options and who wins and loses from each.

Since corporations don't get Permanent Fund Dividends but they do pay income taxes, you can guess what they want.  More money from the Permanent Fund and no income taxes.  We should tap into the Permanent Fund, because that's what it was set up for in the long run - to be an endowment for Alaska.  The non-renewable oil could be turned into renewable capital, and a portion of the state's budget could be funded from the interest.  They key is how big a hit the Permanent Fund should take now and whether income taxes should also be added in.

Poorer folks get a bigger benefit from the PFD than the wealthy.  They would pay less in income taxes.  And they would pay a bigger percent of their income on a sales tax than the wealthy.

And who has the money to sway the public?  The poor and middle income or the wealthy and the corporations?  You can see where this is leading.

GCI has already started a coalition to push for big hits for the Permanent Fund.

But 48,2% in support of an income tax that's 25% of the federal tax is huge!

But the legislative majority hasn't been too good about paying attention to what people think if it's not what they think.  They're still suing the governor over medicaid expansion, despite overwhelming public support.

I'd also note that the * with the explanation for the 25% figure (that's what Oregon has) was NOT on the survey itself.

Here's a link to all the poll responses.

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