Alaska's tax burden

Posted: Tuesday, May 22, 2001

The following editorial appeared in the May 16 issue of the Fairbanks Daily News-Miner:

It is a sorry fact of life that government is taking bigger and bigger bites out of the paychecks of most working Americans.

We Alaskans do our share of complaining. Mention new taxes, or higher taxes and the speaker may as well turn a loaded gun on Alaska's independent-minded, freedom-loving citizenry; the proposal, particularly if it comes from an elected official, is generally greeted as a declaration of war.

Ideally we would all prefer to take care of our own interests, voluntarily lending a hand, when civic duty requires, to stem fires, floods or defend the homeland against invaders.

That free spirit built this nation, and it continues to wield a strong influence. The enthusiasm Alaskans display for volunteerism is rooted in that spirit, as is the popularity for limiting government's growth and involvement in our personal lives.

At the same time, modern American society broadly accepts the need for public schools, public roads, regulated utilities and an ever-expanding public safety network -- keeping the peace on the streets at home and defending this nation's interests abroad. All of which costs Alaskans and other U.S. taxpayers more and more.

As is the case with so many of nature's gifts, we Alaskans are actually sitting pretty with respect to the tax man's grip on our wallets.

Absent any personal income or state sales taxes, Alaska ranks dead last among the 50 states in its average per capita tax burdens, according to the Tax Foundation, a non-profit research outfit that has tracked American taxation trends since 1937.

Each year the Tax Foundation crunches the available data on federal, state and local taxes and calculates the days it takes the average American worker to pay off those annual bills from government's cadre of tax collectors. This year, the group estimates Americans spent an average of 123 days, or two days longer than in 2000, laboring to square government's personal tab.

In general, Tax Freedom Day, the calendar date representing the average worker's tax payoff, has been slipping.

At the turn of the century, Americans, on average, earned enough by Jan. 21 through their labors to satisfy their annual tax bills. By 1925, the foundation's calculations show, Tax Freedom Day slipped to Feb. 3. Government expansion through Franklin Roosevelt's new deal has pushed the date back to approximately March 3 in 1940. Twenty years later, government's continued growth had most Americans working well into April to earn the equivalent of their yearly tax bills.

Last year, the foundation's estimate for Tax Freedom Day edged to May 1 for the first time. This year the group pegs May 3 as the average date the tax man's yearly appetite was satisfied.

Alaskans who feel victimized by the creeping trend might want to take a look at the state-by-state portion of the foundation's survey, which can be viewed through the group's Web site

Tax Freedom Day for Alaska fell on April 16. That's five days earlier than it did in South Dakota, which the foundation calculates is the state with the second-lightest tax burden.

According to the foundation's figures, Alaskans shoulder tax bills totaling an average of $8,933 for every man woman and child -- not a bad deal when you consider residents of the state on the opposite end of the scale, Connecticut, are on the hook for per capita tax bills of $18,051.

As is the case elsewhere in the U.S., the biggest share of Alaska's tax burden comes from the federal government, which collects an average of $7,010 per capita from this state's residents.

The foundation estimates state and local taxes in Alaska at $1,923 per capita, a figure that looks a tad high from the perspective of sales-tax free Fairbanks.

One last point: The Tax Foundation's approach doesn't take into account our state's fondness for giving away the earnings of the Alaska Permanent Fund. The $1,963 Alaskans pocketed through last year's dividend means Tax Freedom Day may arrive in this state as much as a month ahead of the nation.

Call us progressive. Call us free and proud of it. But please save the tears about high taxes burdening Alaska's economy. To afford the government services most Alaskans expect, all we need do is spread state and local tax loads more fairly.

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