Posted by on March 31, 2020 10:43 am
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Categories: Taxes

 

 


 

The price war begun by Saudi Arabia and Russia is claiming more collateral damage, including the finances of the state of Alaska (which decades after peak production in the 1980s still pumps around 500,000 barrels per day). The financial crunch is prompting some Alaskan lawmakers to consider imposing a state income tax — something the famously libertarian/moderately crazy state has long rejected. In an age of ever greater mobility (current pandemic aside) Steve Forbes warns that high-earning individuals could easily decamp to nearby Washington state, which also boasts no income tax. Forbes also offers a diplomatic reminder about Alaska’s attractiveness as a place to live in his letter to Alaskan lawmakers, published in Forbes:

 

“Experience demonstrates that a state income tax ends up doing more harm than good, driving away people and potential businesses from states that have one. Because of its unique location, Alaska needs every allurement possible.”

 

Raising state income taxes is directly correlated with economic decline, Forbes argues, pointing to the woeful examples of Connecticut and New Jersey:

 

“The blunt truth is that states that have enacted income taxes since the 1970s have seen their relative economic performance decline… in 1991 Connecticut instituted an income tax. Today, compared with the rest of the country, the state is one of the lowest performers. Its finances are in shambles; businesses are moving out, as are affluent residents… As happened in Connecticut, New Jersey’s once-envied economic mojo was lost. New Jersey now underperforms the rest of the country. The state’s public pensions are woefully underfunded, and property taxes remain just about the highest in the nation.”

 

In short, Alaska can’t afford an income tax.  Read Forbes’ full letter to Alaskan legislators here.