Coincidentally, just after my last article on the inequity of property taxes in Alaska, the Wyoming legislature announced that it is considering eliminating them in its state.
Wyoming has a population size similar to ours and charges a per capita property tax almost identical to Alaska’s, making it a close comparison to our state when discussing taxation. So, when their state legislature says they are considering eliminating all property taxes, Alaskans should take notice.
Like our state, Wyoming does not collect property taxes at the state level. These taxes are collected by cities and counties and used to fund local governments. However, residents in their state have concerns about this system of taxation that mirrors what has been expressed here. Critics in Wyoming are concerned that the current property tax system is not equally applied and places too much financial burden on homeowners. These are both points I made in a recent article.
The Wyoming Legislature’s Joint Revenue Committee advanced its property tax reform plans for consideration by the full legislature when it reconvenes in February. One proposal is the complete elimination of the property tax and replacing it with an increase in statewide sales tax from 4% to 6% to cover the lost revenue. Alaska currently does not have a sales tax, but if our legislature wanted to consider this option, what Wyoming is doing would be an accurate precedent.
One other way their legislature is considering to replace the lost revenue is to institute an income tax. Wyoming, like Alaska, is one of nine states that do not currently have one.
Both of these proposed alternative sources of revenue have strong critics, and should they be proposed here in Alaska, there will be similar opposition against them.
That being said, maybe it is time that we at least discuss the idea. Here are some arguments supporting the concept of replacing the property tax with a statewide sales tax or income tax.
Currently, there are no property taxes collected in the five boroughs that cover 56% of the land area of Alaska. Residents living in these areas, and I don’t mean to be harsh when I say it, but they are freeloading. The rest of the state pays for their schools and state trooper police protection. An income or sales tax that would impact everybody in the state would at least ensure that every Alaskan contributes something toward their own obligations and isn’t shirking their responsibilities off onto others.
Sales taxes in Alaska aren’t new. Many communities and boroughs already have them. The big advantage of a statewide sales tax would be that it would collect revenue from tourists who visit our two largest cities and currently pay no sales tax on the items they buy. A sales tax would begin to capture revenue from those visitors.
If sales taxes aren’t an acceptable alternative to property taxes, we may wish to consider a statewide income tax. I know this is a very unpopular idea with conservatives, but hear me out. A large number of individuals are transient workers who reside outside Alaska, but come here to work in Prudhoe Bay or in the fishing and mining industries. These workers come up here to earn their wages, but then leave Alaska, taking their money with them to spend for the benefit of the economy in other states. By implementing an income tax, a portion of their wages would be captured to benefit Alaska. Outside workers use our airline terminals, drive on our roads, and enjoy our police protection; they should pay something for the privilege.
ALASKA WATCHMAN DIRECT TO YOUR INBOX
The cost to Alaskan workers wouldn’t be as bad as you might imagine. Every working Alaskan resident currently pays income taxes to the federal government. State income taxes are deductible from federal taxes. The total amount each worker pays in taxes wouldn’t increase; a portion would just go to the state instead of the federal government. While there is a limit on the amount of state and local taxes that can be deducted from a federal tax return, the median wage in Alaska is below that cutoff, so it wouldn’t be an issue for most of us. There may be merit to considering a state income tax as a replacement for the property tax.
To be clear, for all of our legislators reading this who are a product of the Alaska public school system, I am not proposing the introduction of new taxes in addition to a property tax. I suggest we consider this idea only if property taxes are eliminated at the same time. Property taxes are burdensome and unequally applied. They often force elderly Alaskans to sell their homes when constant increases in their homes’ appraised value raises property taxes more than they can afford. The changes proposed here could reduce the overall tax burden on Alaskans.
This proposal deserves serious consideration. In fact, we should be asking why our legislators didn’t think of it first. Why aren’t they thinking of ways to reduce the tax burden on the average Alaskan, like the legislature in Wyoming is doing?
The views expressed here are those of Greg Sarber. Read more Sarber posts at his Seward’s Folly substack.
16 Comments
“for all of our legislators reading this who are a product of the Alaska public school system”…
Had me laughing!
I believe a sales tax to replace property tax would be better. That way tourists, transient workers, and those with “under the table” incomes would all pay in. An income tax only hits transient workers and places the burden on our hard working state residents with legitimate sources of income.
Greg, sales tax? Maybe. Income tax? No way. The federal deduction of state taxes is just redistribution by another name. I think the discussion should begin with how to get the freeloading communities to have a stake and be productive members of society instead of a drain.
Thank you for the report regarding prosperity taxes. I totally agree NO PROPERTY TAXES!
Plus tell the FNSBSD until they take sex out of our schools, you will continue to lose student, money and community support!
Concerned Citizen of USA!
Why not just come up with a tourist tax then? If those people can afford to go on tours they should be able to pay that tax. The majority of the boroughs that do not have property tax are not on the road system and are already paying higher prices on everything! They also don’t have all the jobs available to them like we have here in urban road connected Alaska. I live in the Matsu Burough and I don’t mind paying for my property tax because of how well everything I use is taken care of on daily and seasonal basis.
This is an incredible idea. The transient workers commonly spend only a very small amount of money in state, that at the bar or coffee shop in the airport, yet they make very good wages. An income tax – with the premise of eliminating property taxes – would shift this tax burden to the highest wage earners in the state, the transient workers. This coupled with appropriate tourism taxes would do much to alleviate the burden of property taxes paid by Alaskans. This would lower rent for those renting as their rent is scaled to pay for the taxes as well. For the nay sayers, pay attention to the point that state income taxes are deductible from your federal taxes for the majority of Alaskans. This means an overall tax break for most all Alaskans.
Regarding your comment about freeloaders not paying property taxes for “state trooper police protection” – I think you are conflating two very different things. The Alaska Department of Public Safety (DPS), which includes the Alaska State Troopers and Fish and Wildlife Troopers, receives the majority of its budget from the state’s general fund. Troopers are NOT funded by property taxes.
Municipalities with local police departments (like Anchorage, Fairbanks, Wasilla, and Palmer) typically fund their police through local property taxes, and sometimes sales taxes.
Finally, SALT (State and Local Taxes)federal income tax deduction is not a 1-to-1 deduction. If you are in the 24% federal tax bracket and you deduct $10,000 in SALT, your federal income tax liability is reduced by $2,400 ($10,000 * 24%). This $2,400 reduction in federal tax is the only savings, The new income tax burden if $10,000 isn’t negated by the SALT deduction. Those in lower federal tax brackets, for example 10%, will deduct a smaller percentage ($1,000 in the example of $10,000 state income tax).
“ State income taxes are deductible from federal taxes. The total amount each worker pays in taxes wouldn’t increase; a portion would just go to the state instead of the federal government.”
This is wrong and not how deductions work. Your total income tax bill most definitely would increase.
I feel like I’m living in California. We’ve got people screaming for multi-thousand dollar PFD’s, others talking about income and sales taxes to afford paying out “full” PFDs, borough fuel taxes, and now switching from local property taxes to sales and income taxes. We’ve got socialists taking control of our biggest cities down south, and it’s happening in Anchorage. There seems to be no end to the insanity. I’m glad that I’m so old. I don’t fit here anymore.
Another great article from Greg “Walker” Sarber. Seriously, What fool would believe that Alaska’s money-sucking political class would ever part with property taxes. Any new tax implemented would, without question, be IN ADDITION TO property taxes. There is no such thing as enough money for government. All infrastructure, repairs and services could be paid for with a very small fraction of the tax money already being collected. what actually needs to happen is a drastic reduction in government bloat. We could start with our miserably failing, utterly unaccountable “education” system.
Another exposed fraud to the homeowners , property owners flipping the bill for renters, yes the owner of the property pays but not the renter , just like gasoline taxes paid , I can’t stand bicycles on the road they don’t pay for maintenance and feel like premadonna’s on the highways with no fees , ya ya you might own a car also , who cares . Only property owners should be able to decide this and auto drivers should have the right of way , get out of the road cyclists !
Having no property taxes in Delta Junction was and is a boon to individual tax year filings. Fairbanks like other organized boroughs makes it easy to dump a load of expense on those who pay property taxes and other municipal taxes. The unorganized boroughs really dump on everyone else and the state always picks up the tabs for every problem the unorganized boroughs deem necessary to them. Those boroughs need to organize and start looking at reality. I am for taxing the corporations and stop the property tax in Alaska.
….think of the moneys going into those unorganized boroughs in terms of federal money for leases or corporate money on unorganized boroughs . All organized boroughs pay the price and carry the responsibility.
Sales tax perhaps, but absolutely positively hell no to an income tax
Bad idea, Greg.
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Yes, property taxes suck. Stiffing productive people with sales and income taxes to make up for nixing property taxes sucks more.
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The IRS master list of nonprofit organizations shows 5728 nonprofits registered in Alaska. Ya think they won’t be exempt from paying sales or income taxes or making payments in lieu of taxes, if property taxes are nixed?
(https://www.irs.gov/charities-non-profits/exempt-organizations-business-master-file-extract-eo-bmf)
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Productive citizens have to be stuck with high sales and income taxes to make up for taxes which 5728 non-profits won’t pay.
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Native Corporation dividend checks won’t be taxed.
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Productive citizens have to be stuck with high sales and income taxes to make up for that loss too.
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In a state where registered special interests outnumber legislators nearly 8 to 1, where the education industry is unique in its ability to extort any amount of money it wants, where public-union employees and Teamsters are guaranteed raises to cover expenses at tax time, how will tax rates be set, who’ll set them?
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Biggest boroughs in the state aren’t supported by property taxes. They’ll still get their state-money handouts, though.
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Productive citizens have to be stuck with high sales and income taxes to keep that gravy train running too.
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How much money is actually stashed out of taxpayers’ sight or stashed in plain sight but out of taxpayers’ reach like they do at the Alaska Municipal League Investment Pool? How much is wasted on lobbyists and fraudulent Medicare/Medicaid claims, SNAP fraud, illegal aliens, the education industry, revenue sharing, and everything else that doesn’t deserve a dime of taxpayers’ money but seems to get more and more every year?
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Is it all about rewarding epic waste, fraud, and abuse with sales and income taxes because they do it in Wyoming?
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Productive citizens have to be stuck with high sales and income taxes to pay for fraud, waste, and abuse which seems to be what state government is really all about.
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Get the crime under control with forensic audits of state and local finances, maybe get the feds to fix the racketeering odor, who knows, property taxes might even fall to affordable levels, making the state sales and income tax scheme even dumber than it sounds.
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What stops property taxes from rising back to “pre-nixed” levels, right along with sales and income taxes that, like certain social diseases, won’t go away?
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Answer: Nothing. Grand juries and elections were all voter/taxpayers had to stop this organized theft but, both got broken, corrupted beyond our ability to fix, at least for now, and you can be sure the mob who did that knows it. So, the answer is nothing stops them from easing property taxes back to previous levels, or more if they wish.
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Never did see how many productive people have to be stiffed how much to make this scheme work, or what Plan B is if too many productive people get sick of the grift and leave, and remaining people can’t be taxed enough to support officials in the style to which they’ve become entitled.
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Was the idea all along to force sales and income taxes on productive people, hoping they’ll stick around long enough to keep state and local governments from going bust before the gas pipeline boom finally hits?
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Last thing, Greg, could property-tax payers actually comprise a taxpayer union, a last line of defense against state and local officials who clearly don’t like their constituents?
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What grand thing happens by breaking up such a union who might have just enough economic muscle to keep government predators at bay for as long as they pay the bills?
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Time to stick a fork in this one and call it done, Greg.
To some degree a sales tax would be voluntary. If you give the politicians a foot in the door for an income tax you will never have any control. All they do is take take take spend spend spend your hard earned money, a lot of it on trash programs that claim diversity, equity and inclusion. Not to mention that trans crap. At least Eliminating the property tax we have the freedom of owning our own home.