Alaska's Income Tax proposal shows why to protect the sales tax

Remember how they said that don’t worry, beating the Republican with independent Bill Walker is fine, and he’d be the TRUE CONSERVATIVE pick for Governor of Alaska? Turns out that was wrong, and backing the Republican was the right call.

We know this because Bill Walker wants to impose an income tax on Alaska. That’s a terrible idea of course, but the root cause is important: Alaska’s main revenue stream is shrinking, and there’s a need to protect it. This is a lesson that matters in other states, too.


Bill Walker

While Alaska’s oil royalties are a special case, other states have big tax revenues that are in jeopardy right now. Yes, I’m talking about sales taxes. While the oil revenue in Alaska isn’t really in anyone’s control, the details of sales tax revenue are under the control of policymakers in this country.

And the way we’re making sales tax policy right now is abysmal. It’s full of special cases, cronyist deals, and every other kind of inconsistent, unfair decision making you can possibly make. Big businesses on both sides pour in money, bad bills come up, and nothing good happens.

But something does need done. I think the answer is an interstate compact, one that simplifies and streamlines sales taxes, and finds a way to ensure that we’re continuing to tax commerce to ensure the continued functioning of government, rather than imposing new taxes as a substitute.

We know what happens when you do that: you end up with both taxes, and government just keeps on growing. Which is why criticisms of Bill Walker are spot-on:

“The governor’s proposal leads on taxes but doesn’t prioritize streamlining government to reflect our fiscal situation,” said Sen. Anna MacKinnon (R-Eagle River.) “The cuts to state government that Gov. Walker has proposed only account for two percent of the deficit; we can do better.”

We can do better in Alaska, and we can do better nationally in sales tax states, without giving preferential treatment to businesses, or siding with cronies to attack their competitors. But we can’t do nothing, because then we end up in a spot like Alaska, where eventually we endup with new or higher income taxes, and then everybody loses.