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For Immediate Release: Wednesday, April 13, 2016
Contact: Cassandra Stalzer, 907-334-0520 or 907-223-9908 (cell)

ANCHORAGE, AK – A new report commissioned by Rasmuson Foundation as part of its Plan4Alaska campaign finds that while strategies currently proposed to close Alaska’s $4 billion budget gap would significantly improve the state’s fiscal standing, a diversified revenue strategy is needed this year to close the gap and equitably distribute financial impact.

Rasmuson Foundation commissioned the report in response to comments from lawmakers about the dearth of economic data available to gauge the impact of various revenue scenarios. “Distributional Analyses of Revenue Options for Alaska” was produced by the Institute on Taxation and Economic Policy (ITEP), a nonprofit, non-partisan research organization with a mission to ensure that elected officials, the media, and the general public have access to accurate, timely, and straightforward information that allows them to understand the effects of current and proposed tax policies.

ITEP used Gov. Bill Walker’s Sustainable Alaska Plan in its analysis, and evaluated its proposed reductions to the Permanent Fund dividend, and income, alcohol, tobacco, and motor fuel tax increases to determine effects on Alaskans at different income levels. ITEP found that a fiscal plan that relied heavily on Permanent Fund earnings without income tax and other forms of taxation would disproportionately impact middle-income working families and low-income Alaskans.

“Yesterday the Legislature released two bills that will go a long way toward a solution by restructuring how Permanent Fund earnings are used,” said Diane Kaplan, president and CEO at Rasmuson Foundation. “This analysis shows that closing Alaska’s budget gap will require a mix of policy changes, and that implementing a partial plan will require more sacrifice from some Alaskans than others leaving us in an uncertain economic climate. Lawmakers must consider a comprehensive approach that includes broad-based taxes, restructuring oil tax credits and implementing corporate tax changes this year.”

“Under the personal income tax proposed by Gov. Walker, high-income Alaskans would pay more tax than their less affluent neighbors” said Carl Davis, research director at ITEP.  “The proposed income tax would be the smallest in the nation by far – less than 1percent of Alaskans’ personal income. A tax of this size is not capable of fully balancing the impact associated with dramatic cuts to the Permanent Fund dividend.”

“If we want to preserve the Alaska we love, we need a balanced, long-term solution to our budget problems, one that uses every tool we have,” said Rasmuson Foundation Chair Ed Rasmuson. “That means all Alaska citizens and industries stepping up to the plate. Nobody gets a free ride.”

The report also examines a variety of options to derive more revenue from the income tax and less from reductions to the dividend.  Among the alternative income tax structures examined are a doubling of the governor’s proposed tax, the implementation of a more progressive income tax proposed by Rep. Paul Seaton in 2015, and the enactment of a 6.4 percent flat tax on incomes over $100,000 (or over $200,000 for married couples).

Any fiscal plan relying on a sales tax in lieu of an income tax would likely be even more lopsided in its impact among Alaskans. While ITEP’s report does not analyze the impact of a general sales tax, the organization’s previous research titled “Who Pays?” found that four of the five most regressive tax systems in the country exist in states that levy a sales tax without any kind of accompanying income tax.

Read the report.


About Plan4Alaska
Rasmuson Foundation has launched a statewide campaign to talk with Alaskans about the budget crisis, to share facts and options, and to explain the urgency of acting now. Learn more at Plan4Alaska.com.

About the Foundation
Rasmuson Foundation was created in May 1955 by Jenny Rasmuson to honor her late husband “E.A.” Rasmuson. Through grantmaking and initiatives, the Foundation is a catalyst to promote a better life for all Alaskans.