“Taxes, taxes and more taxes” the Alaska Republican Party whined in a Facebook post this week. Then they referred to Governor Bill Walker as a Democrat, labeled three House Republicans turncoats and two others pretend independents, “all willing to shut down the government unless they get an income tax.”
For the past three years this divorced-from-reality rhetoric has kept the state from effectively addressing its fiscal crisis.
It’s simply untrue to imply that Alaskans are already overtaxed. We haven’t been paying much at all in almost four decades. Numerous studies put our personal tax burden among the lowest in the country. And we’re the only state that gives its citizens an annual dividend.
Walker, Gabrielle LeDoux (R-Anchorage), Paul Seaton (R-Homer) and Louise Stutes (R-Kodiak) aren’t Democrats at all. Most of their guiding principles are very well aligned with the GOP. Like independents Jason Grenn (Anchorage) and Dan Ortiz (Ketchikan), they’ve chosen to put the health of Alaska ahead of party loyalty.
Finally, if our government shuts down next month, the GOP shares the blame. They held firmly to the no-tax chapter of their bible while in command of both houses in 2015 and 2016.
After months promising no new income tax this year, Senate Republicans finally offered up a compromise. Entitled “An act imposing a limited educational facilities, maintenance, and construction tax,” SB 12 is pretending not to be an income tax even though it’ll tax every wage earning and self-employed individual a fixed amount based on the income they earn.
It won’t raise enough revenue to close the budget gap. But at least they’ve made some movement away from their no income tax pledge. And it’s about time because it’s always been supported by superficial arguments.
One is that taxpayers, not the government, know best how to spend their money. Of course, that appeals to anyone who hates paying taxes. But it encourages wholesale avoidance of discussions about how government should function.
Supposedly, tax increases discourage private business investments. This point has merit in some cases, but not all. Like we’re always told by the oil industry, they accept taxes as long the policy is stable. The same is true for businesses dependent on government funding, the most obvious example being the construction industry.
The biggest fallacy though is the claim that low taxes will always reward us with private sector growth and job creation.
Consider the Kansas experiment that began after Sam Brownback was elected governor. Backed by Republican majorities in their legislature, the former U.S. Senator enacted the party’s dream of dramatic tax cuts matched by major reductions in government spending. Called a “march to zero,” it was supposed to usher in a business boom, a mountain of new jobs and solid economic growth that would generate the revenue needed to balance the state’s budget.
It didn’t happen.
After three years of sluggish growth and budget deficits, Brownback could only manage $50 million more in cuts to the state’s $11 billion budget. His 2012 income tax cuts remained in place. But to cover the rest of the shortfall that year, he increased the state’s sales, tobacco and fuel taxes.
This year the Kansas Legislature had to wrestle with a projected $900 million deficit over the next two years. With Republicans holding a 3-1 majority in the Senate, and 2-1 in the house, they passed a bill raising income taxes across the board. Brownback vetoed it. But this past week both houses voted to override him.
By Alaska GOP standards, that means Kansas now has 55 turncoats in their legislature.
In California, a very different experiment with income taxes also began in 2012. Voters there approved a hike that made their top income tax bracket the highest in the nation. Every true Republican predicted the state’s economy would tank. Instead, it’s grown as fast or faster than the rest of the country.
The moral of this story isn’t that increasing taxes is the solution to every government fiscal crisis. State and national economies are far too dynamic and complicated for simple answers either way. But what we can learn from Kansas is even though strict adherence to party dogma might seem like winning, it’s not a substitute for effective governance.
• Rich Moniak is a Juneau resident and retired civil engineer with more than 25 years of experience working in the public sector.
