Wednesday, April 19, 2017

The Alaska Income Tax Lottery Proposal

Yesterday's Alaska Dispatch had these two front page headlines:

1.  Senate wants raffle to help pay for education
2.  Senate gets income tax bill from the House

Note:  The online headlines are a little different from the ones in the actual newspaper.  Also there were other front page headlines as well, like this one:  "Prospective musk ox farmers face some huge hurdles"

So, the gist is this:

The Alaska State House, controlled by a Democratic led majority has proposed to deal with Alaska's budget deficits with a plan that includes budget cuts AND revenue increases, including resurrecting the income tax that was abolished after the oil money started flowing into Juneau, back in 1980.

But the Republican led State Senate has a severe allergy to the word taxes that causes them to break out in a basic services cutting delirium when the word taxes, particularly income taxes, is mentioned.  BUT, a raffle is something they can get behind.

I'd note that I proposed a similar idea back in 2015: (it's near the bottom of the post)

"As I'm thinking about this, I bet Alaskans would be willing to add a lottery twist to the PFD.  I bet we'd be willing to lower the average payout if there was a chance to win some really big prize money for a few who are randomly selected.  I bet most Alaskans would give up 10% of their check for the chance to win $100,000."  

Income Tax Lottery

But there's another proposal I've been pushing for years.  Back in March 2011 I argued that we should tie a lottery into a) our income taxes and b) voting.  Here's an excerpt from that post which started with a story about adding a lottery component to radar speeding cameras to reward people who were driving the speed limit as well as ticketing speeders:
"So, for a long time I've thought we should use techniques similar to the speeding lottery to encourage other behaviors we want people to do.  Here are two examples:

1.    Income Tax Lottery: Your lottery ticket is your income tax form.  There need to be lots of winners here - maybe one big win nationally, one smaller win per state, and lots oflittle wins.  There might even be fewer and less lucrative prizes for people who file late.  I'm sure this would increase the number of filers, and the cost of the prizes would be less than the increase in tax revenues."

That old post was based on the concept of 'gamifying' or 'gamification.'  Here's a post from the gamification blog that talks about using games to make citizen participation more interesting.  NPR had done a report on using speeding radar cameras used to get speeders and red light runners to also reward people driving the speed limit.  Everyone driving at or below the speed limit would be entered into a lottery and could win prizes.  

The Obvious Compromise

So, if the Democrats want an income tax and the Republicans want a raffle, the obvious answer is to add a lottery into the income tax.  There would be a couple of big prizes and a lot of smaller ones - like getting double your income tax back.  That way, the wealthy who pay more income tax, stand to win more.  That should please the Republicans.  And if you pay no taxes, you aren't eligible.  

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