There was a time when Alaska was a place where government served the people, not the other way around. It was a time when our constitution promised “maximum local self-government” and the Permanent Fund Dividend represented something revolutionary… a promise that every Alaskan, rich or poor, young or old, would share in the wealth of the land.

The PFD was more than a check. It was a statement of ownership, fairness and equality. It was a practical answer to an ancient problem of government. How to keep the political class from turning public wealth into private power?

But in the last decade, something subtle and corrosive happened. Politicians changed the rules, not by passing a tax, not by asking voters for consent, but by quietly diverting the people’s share of the Permanent Fund into government spending. They called it “fiscal responsibility.” In truth, it was the invention of a new kind of tax. One never voted on, never debated honestly, and never named for what it is: an end-run tax on every Alaskan.

Instead of sending you a bill, they simply never send you the money that’s already yours. Economists call this a reverse transfer.

The Shell Game of the POMV

In 2018, lawmakers replaced the old statutory PFD formula with a new mechanism called the Percent of Market Value (POMV) draw. This is a cap limiting how much could be taken each year from the Permanent Fund’s investment earnings.

The law allowed up to 5% of the Fund’s five-year average market value to be withdrawn annually, split between dividends and government spending. That seemed harmless enough. But the Legislature did not divide the money evenly. They began taking more and more of the 5% draw for themselves, leaving the people with whatever crumbs remained.

The PFD, once the symbol of shared wealth, was turned into a budget line item. Something to be debated, cut, or withheld depending on political mood. When government takes what once belonged to the people, without enacting a tax or asking permission, that’s not budgeting. That’s appropriation by stealth.

A Tax by Any Other Name

When the state withholds $1,000 from each Alaskan that would otherwise have been paid under the lawful dividend formula, it takes that $1,000 and spends it for general government purposes. Every man, woman, and child loses the same amount. That is, by definition, a head tax. A head tax is a per-person levy, extracted equally from every citizen.

The only difference is that instead of sending you a bill, they simply never send you the money that’s already yours. Economists call this a reverse transfer. This is money collected from individuals indirectly to finance government operations. The effect is identical to a tax increase: the state’s revenues rise, households’ disposable income falls, and government grows larger while personal freedom shrinks.

This hidden tax is regressive. The poor pay far more, proportionally, than the rich. A lost $1,000 PFD means little to a wealthy household earning six figures, but it can mean rent, food, or heating oil for a working-class family

How the PFD Once Reversed the Colonial Model

To see what Alaska once had, and what it is losing, it’s worth remembering a lesson from history.

As Albert Jay Nock observed, following Charles Beard, the earliest English settlements in America were not truly governments in the modern sense but chartered companies. They were “autonomous States,” Beard wrote, because they had constitutions, treasuries, armies, and the power to tax, all for the benefit of investors an ocean away.

These colonial corporations embodied the same structure as the modern state: those who govern and extract are separated from those who produce and pay. Nock noted that “every essential element long afterward found in the government of the American State appeared in the chartered corporation that started English civilization in America.”

The distinction was distance: the owning and exploiting class sat on one side of the Atlantic; the exploited class lived on the other.

The Alaska Permanent Fund Dividend was designed to invert that ancient model. It placed the ownership of Alaska’s resource wealth directly in the hands of its people and not a distant class of governors or investors. It declared that the “sovereign” in Alaska is the citizen, not the corporation or the bureaucrat. The PFD was the anti-colonial remedy to centuries of political centralization.

When the state reduces the PFD to fund itself, it recreates the colonial relationship Nock described. The government once again becomes the trading company, operating on behalf of its own class of beneficiaries, administering the people’s resources as if the people were tenants on their own land.

This is not the fiscal discipline of a free state. It is the quiet reappearance of corporate government. This is the very structure that the American Revolution and Alaska’s Constitution sought to abolish.

The Regressive, Hidden Tax

This hidden tax is regressive. The poor pay far more, proportionally, than the rich. A lost $1,000 PFD means little to a wealthy household earning six figures, but it can mean rent, food, or heating oil for a working-class family, especially in rural Alaska. No state income tax in America is more regressive than this one, because the rate doesn’t vary, only the pain.

Even worse, it’s a tax imposed without law. Article IX, Section 1 of the Alaska Constitution gives only the Legislature the power to levy taxes, and only by statute. Yet the reduction of the PFD wasn’t enacted as a tax law. It was done through the budget process, by appropriation. No statute ever declared, “We are taxing Alaskans by diverting their dividends to the state.” And yet that’s exactly what happened. It’s taxation without legal authorization. It is an end run around constitutional process and public consent.

From Citizen Shareholder to Colonial Subject

Under the statutory formula, every Alaskan was a shareholder in the state’s resource wealth. Under the current system, the citizen becomes a revenue source. The relationship has flipped: the government that was supposed to serve the people has reverted to the role of the colonial company, taking its cut first and calling the remainder “the people’s share.”

This is not the fiscal discipline of a free state. It is the quiet reappearance of corporate government. This is the very structure that the American Revolution and Alaska’s Constitution sought to abolish.

Reclaiming the People’s Share

If the state truly needs to tax its citizens, then pass a tax. Debate it openly. Let the people see who supports it and who doesn’t. But don’t disguise it as “budget restraint.” Don’t take what the people already own and pretend it’s generosity.

Restoring the full statutory PFD isn’t a handout; it’s a reaffirmation of ownership. It is the modern opposite of colonial rule. It returns Alaska to what it was meant to be: a state in which the people are not subjects of the government but stakeholders in it.

The Choice Before Us

The question before Alaska today is not just about a dividend formula. It is about the structure of freedom itself. Will Alaska remain a place where the government is the steward of the people’s wealth, or will it drift back toward the old model Nock described which is a chartered company operating for the government’s benefit while its citizens finance the enterprise?

If you quietly take from every citizen what the law promised them, you haven’t balanced a budget, you’ve imposed a tax by another name. And you’ve done it without the courage to call it what it is.

That’s not fiscal prudence. That’s an end run around democracy.

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