IF Alaska needs to raise new government revenues, there is a much better way to do it than through PFD cuts or the other current proposals.

1. Alaskans for Sustainable Budgets
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There is a better way ...

2. Some argue that government should cut
spending more instead of adopting taxes

3. But last session Senate Republicans voted 12-2 to
tax the PFD instead of cutting spending more

4. For cutting the PFD instead of spending:
Sen. Pete Kelly (Fairbanks)
Sen. John Coghill (Fairbanks)
Sen. Click Bishop (Fairbanks)
Sen. David Wilson (Wasilla)
Sen. Anna MacKinnon (Eagle River)
Sen. Mia Costello (Anchorage)
Sen. Natasha vonImhoff (Anchorage)
Sen. Kevin Meyer (Anchorage)
Sen. Cathy Giessel (Anchorage)
Sen. Peter Micciche (Soldotna)
Sen. Gary Stevens (Kodiak)
Sen. Bert Stedman (Sitka)
Against
Sen. Mike Dunleavy (Wasilla)
Sen. Shelley Hughes (Palmer)
Those voting in favor gave up on making deeper
spending cuts and voted to tax the PFD instead

5. According to ISER studies, cutting the PFD has the
worst impact on the Alaska economy & families
Cutting the PFD …
▪ Has "the largest adverse
impact on the economy [of all
the new revenue options] per
dollar of revenues raised,"
▪ Is "by far the costliest measure
for Alaska families," and
▪ "[L]ikely increase[s] the
number of Alaskans below the
poverty line by 12-15,000 (2%
of Alaskans).”

6. The House approach also
relies heavily on PFD cuts
-- Even with an income tax
component it still hits middle
and lower income families(and
the economy) far harder.
And the House approach isn’t any better
Percent of income for average family of
four taken by govt under House approach
Top 20% (upper income) 4.5%
Next 20% (upper middle) 5.6%
Next 20% (middle) 7.8%
Next 20% (lower middle) 12.4%
Next 20% (low income) 24.1%

7. “… sales taxes tend to be regressive,
impacting low- and middle-income
families more heavily than high-
income families …” ~ITEP,
“Comparing the Distributional Impact
of Revenue Options in Alaska”
Some suggest a statewide sales tax,
but that also is heavily regressive
Percent of income for average family of four
taken by govt using a sales tax designed to
raise same revenue as Senate PFD cut
Top 20% (upper income) 1.5%
Next 20% (upper middle) 3.4%
Next 20% (middle) 4.7%
Next 20% (lower middle) 7.8%
Next 20% (low income) 8.1%

8. Unlike Senate, House & sales
tax approaches, a flat tax
treats all income brackets
the same
IF we are going there, a flat tax is the
much better way to raise new revenue
Senate House Sales Tax Flat Tax
Top 20% (upper income) 1.9% 4.5% 1.5% 2.8%
Next 20% (upper middle) 5.3% 5.6% 3.4% 2.8%
Next 20% (middle) 8.8% 7.8% 4.7% 2.8%
Next 20% (lower middle) 15.7% 12.4% 7.8% 2.8%
Next 20% (low income) 30.4% 24.1% 8.1% 2.8%
Percent of income for average family of four
taken by govt under various approaches

9. “Recessions generally occur when there is a
widespread drop in spending (an adverse
demand shock) … A fall-off in
consumer demand is normally the culprit”
Especially in a recession, how government raises
‘new revenue’ is critically important
▪ Taking money out of consumers’ hands makes a
recession worse.
▪ Taking money disproportionately from some
makes the recession disproportionately worse for
them and if they spend a higher percentage in the
Alaska economy, makes the recession worse also
for the overall economy.
Because of its huge disproportionate effect a
PFD cut has the “largest adverse effect” on
the overall Alaska economy and families. A
flat tax spreads the effect proportionately.

10. Alaskans for Sustainable Budgets
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There is a better way:
If Alaska is going to raise new revenues, a
flat tax is the much better approach