A flawed response

To the editor: In his letter (Daily News-Miner, April 25) about the recent Buckeye Institute report, Andrew Kidd wrote, “We want to assure Alaskans about the reliability of our analysis as well as the conclusions we draw.” But by the very standards of his letter, neither the report nor its conclusions are reliable.

The letter states, “We encourage a debate that recognizes the costs and benefits of any proposal to address the state’s budget shortfall.” That’s exactly what the report fails to do by completely ignoring the economic implications of what the authors recommend as the alternative to new taxes — further spending cuts.

The letter states, “Alaska’s policymakers must look at all possibilities to address the state’s shortfall, but before they raise taxes, they — and Alaskans — should understand the impact that decision would have.” By exactly the same reasoning, before we further cut state spending we should understand the impact that decision would have. What would be the economic impacts of cutting K-12 education funding? What about the ability of the University of Alaska Fairbanks to attract federal research funding? What about the impact of ferry service cutbacks for coastal communities?

If you haven’t analyzed those questions, you can’t credibly argue that the economic impacts of some level of taxes would be worse.

As I wrote for ISER’s 2016 study of “Short-Run Economic Impacts of Alaska Fiscal Options”, “In general, and in most states, taxes are a ‘necessary evil’ — countries and states impose taxes not because they are good for the economy or because anyone likes paying taxes but rather because there needs to be some level of government and there needs to be some way of paying for it. Thus, the major economic and political debates are over (a) What is the appropriate balance between the services and benefits government provides and the negative effects of taxes? (b) What kinds of taxes help keep the negative effects to a minimum? and (c) What kinds of taxes are most fair?”

Having already cut inflation-adjusted per-capita state spending to the lowest levels since oil began flowing through the pipeline, those are the issues we should be debating in Alaska.

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