By Quinn Townsend – (Alaska Policy Forum)

In the spring of 2019, Alaska Policy Forum published a report with economists from The Buckeye Institute examining the need for state spending reductions and the economic effects of 2019 tax proposals. While the numbers are not up to date for 2022, the economic effects discussed are the same.

The authors found that all tax proposals from 2019, such as implementing an income tax and a statewide sales tax, would hurt Alaska’s economy and add little revenue to the state’s pocketbook. While implementing a sales tax rather than an income tax would hurt Alaskans less, economists show that all taxes “[stunt] Alaska’s economic growth, [create] fewer jobs, and [fail] to generate enough revenue to cover current overspending.”

Additionally, their “findings are consistent with other empirical economic research that consistently demonstrates the harmful economic effects of taxation, and confirms that the private sector – not government spending – drives economic growth and prosperity.” 

What conclusion can we take from this report today? While implementing taxes to raise revenues might sound tempting to policymakers, the burden will be too great for Alaskans. Reducing total state spending before discussing an income tax or broad-based sales tax is the necessary first step policymakers must make to address budget woes.

Click here to open a PDF of the report in a new tab. The PDF includes the Appendix.  

More taxes can’t solve Alaska’s unsustainable spending

Quinn Townsend
Quinn Townsend is the Policy Manager at Alaska Policy Forum with an M.S. in Resource Economics and Management from West Virginia University. Previously, she worked as the Economic Research Analyst at The Buckeye Institute. She is a graduate of the Heritage Foundation’s strategic communications fellowship and a Young Voices Contributor.


  • Neil DeWitt says:

    And here we go again! When is the state of Alaska going to have yo live within their means? I and all of you have to. If we don’t have money we. ant go raid the PFD or raise taxes for our wants. Why is any different for the state? I’ve lived here fir 37+ years and it’s always been the same old thing. The state don’t have enough money. Well I day it’s about time to make a list of what we NEED and what we want. If we don’t have the money the project doesn’t happen. It’s that simple. Next year do the same till Juneau learns there is only so much. The cash cow has dried up.

  • Friend of Humanity says:

    Neil DeWitt, if Bill Walker or Ges Lara get in office, this Alaska deficiency is going to put the White House to shame.

  • micah6v8 says:

    Alaskans please hear me. I am a fiscal and political dissident and refuge from an unfortunate blue state. The final straw was doing away with religious exemption from the jab to thunderous acceptance from many residents.
    Do Not allow this taxation to happen. It will end Alaska as you know it. It will become a blue state if a sales or income tax is implemented. It is the clear road to ruin. The direction to a brighter future for all is less federal and state government and consequent dependence on them.

  • DaveMaxwell says:

    Don’t forget it was dunleavy that just passed the largest budget in Alaskans history!
    Paying for it , guess will figure that out later!
    Blaming is sooo easy. Taking ownership and being accountable never happens!

  • FreedomAK says:

    Meanwhile, state agency budget managers every year are faced with spending every single penny of their fiscal year budget or forget asking for more or even the same amount during the next fiscal planning process. So they have the option of going on a fiscal year-end spending spree (very often for things they don’t need) or relinquishing unspent funds back to the State coffers. The latter being punishable by a reduced budget the former being celebrated as coming in on budget! Line 100 money which is allocated for personnel salaries is a shell game and slush fund for discretionary year end spending and other needs during the fiscal year. Even though it’s not supposed to be used that way. It’s not a matter of careless spending for most budget managers. It’s survival. Now don’t try this at home folks!! The politicians and top admin folks clamor for “revenue enhancement” under the guise of fiscal stability. And nothing changes.

  • FreedomAK says:

    Funny. I’ve written several comments over the course of time here about just a few of the underhanded games being played within the Alaska budgetary process and NONE of them have been allowed through to a published comment. Interesting ……

  • Michael Lindbeck says:

    We Alaskans need to have this discussion: do we want a self-reliant population or one that’s government dependent? The PFD attracts large families & lower economic groups who also require more government spending. Income taxes are only paid by less than 50%, & only by higher income, who require less government spending & to whom the PFD is a minor income source. Then there are the self-sufficient, who don’t use many government programs but to whom the PFD is invaluable. Those who want an inviolate PFD include the poor, the self-sufficient, & those, like me, who see the dark side of stealing it for ever increasing big government programs & spending. Those wanting to use the PFD for bloated government spending include leftists & the naive well-to-do (often the same people) who think raiding everyone’s PFDs will prevent an income tax. But, ironically… or hypocritically… or disingenuously, attacking the PFD, for government programs which primarily help the poor, hits the poor hardest, in effect, a truly regressive tax, which increases the need for government assistance, creating a self-fueling cycle of increasing spending. We, as Alaskans, can’t find a solution until we decide who we are & who we want to be. Personally, I liked the pre-oil, pre-PFD Alaska much better: purer, more basic, self-sufficient, at least neighbors instead of government, less crime,… People came & stayed here for Alaska itself, not for jobs, not for money. But, this government funding discussion is pointless & premature until we decide on government spending, & to do that we need a vision of what we want our Alaska to look like.

  • JD says:

    The state legislature is factually the GREATEST drain on the state budget. It matters not which party you support . They game the “90 day” session EVERY year and extend to 120 days. Then they add repetitive “special sessions”. All of which drain the people’s state bank account. But they insist they are not at fault, it is our fault for wanting OUR full PFD. It’s also OUR fault for not approving endless taxation. I say NO! Please explain to me who supports anyone…anyone who finds it acceptable to pay people for not doing the job we hire them for? Would you pay full price and more for a contractor who builds 1/3 of your house after you paid everything they put on the contract? Who’s fault is it when the contractor says they will build your home in 90 days, then doesn’t start work until day 75 and it’s not even finished on day 120? Vote out EVERY politician. Then don’t elect any politician who will not sign a legal document that requires them to finish the people’s business in the required 90 days or each of them must start repaying their daily salary for every day over the 90 day session. Then we will solve our Alaska state budget issues.