A Stitch in Haste

(Loosely based on a post originally published December 20th, 2004; heavily edited, and some links updated with more recent data. Additional post-Palin thoughts appended.)

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First, some background:

–Alaska has been the top recipient of federal taxpayer dollars per capita every year since 1999, and one of the three most lopsided states in terms of “receipts versus taxes” every year since 2003. For example, for every $1.00 Alaskans sent to the IRS in 2005, Alaska received $1.89 in federal expenditures. These federal subsidies from lower-48 taxpayers have helped Alaska maintain the lowest tax burden in the nation every year since 1999 and the first or second lowest every year since 1981.

–Besides its nearly 2:1 federal tax subsidy, the Alaska government is primarily funded by taxes on oil and natural gas production (i.e., through higher gasoline and other energy prices paid by the rest of the country).

–As a result, Alaska is the only the state in the Union to have neither a state income tax nor a state sales tax. Indeed, Juneau gets so much money from so many sources that it pays residents an annual subsidy out of the state coffers — currently about $1,600 per person.

–Only 25 of Alaska’s 161 municipalities levied a property tax as of 2004.

In other words, Alaska is pretty much a leech on the rest of America — and, tax-wise, Alaskans have it pretty good.

But apparently not “pretty good” enough, as they are now proposing even more bloodsucking:

A citizen’s initiative to tax the cruise ship industry and enforce stricter environmental standards has been approved by Lt. Gov. Loren Leman for the August 2006 primary. The initiative would institute a $50 head tax and a 33 percent tax on onboard gambling revenue, and would subject the industry to Alaska’s corporate income tax.
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Taxing the industry could lead to a decline in cruise ship travelers visiting the state, according to John Hansen, president of the North West CruiseShip Association. “We’re very concerned about the elements of the initiative,” Hansen said. “We believe it has significant implications for all of Alaska.” [UPDATE: See this post for a debunking of the "tax the tourist" fallacy.]
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The cruise industry sends about $800 million to the state annually through taxes, sales, shore excursions and visitors staying in hotels, Hansen said. The industry also is a good marketing tool for the state, he said. “A lot of people first visit by cruise and then they come back,” Hansen said.

Just one small problem: onboard gaming occurs exclusively in international waters. Alaska can’t tax it.

[See the original post for the constitutional analysis, which is not the point of this reprint.]

But take a step a back from the Constitution for a moment. By what logic or moral theory does Alaska or any state dare try to tax anything that occurs, not only outside the state, but outside the country? Try to imagine New York City deciding that, as the price of being able to visit our fair metropolis, tourists had to pay a special “visitors income tax.” Try to imagine Florida demanding 33% of an airline’s systemwide revenues just for the privilege of landing planes in West Palm Beach. Try to imagine if California tried to confiscate 33% of Las Vegas’ casino revenues “just because.” [UPDATE: But see this post.]

(And keep in mind, we are talking about 33% of the the cruise ships’ gaming revenues, not their profits.)

It’s been almost fifty years since Alaska was admitted to the Union. Isn’t it time for Alaskans to start carrying their own weight, paying for their own government and stop trying to squeeze money from everyone but themselves?

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I realize that no one, myself included, cares what became of that cruise tax initiative (it passed). But we do care about whether Sarah Palin is a moral defective “different kind of politician.”

Palin, then running for governor, initially supported the extortionist tax:

She said she supports last summer’s cruise initiative “literally,” believing that voters knew what they were doing, especially in wanting ocean rangers on the ships. She said she has encouraged legislators “not to tweak it.” … As for the economics of the initiative, she said most Alaskans wanted a value for their resource, through the tax on multi-national corporations that bring the tourists here.

Later, Palin decided that “tweaking” was a good idea after all:

She recently told tourism industry officials that if elected, she would work with them to “mitigate some of the impacts” of the law.

File that under “reformer” politics, I suppose.

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Recall the fiscal situation in Alaska. Through a combination of oil revenue and federal subsidies from the rest of the nation — you and me — Alaska’s elected leaders have at least one thing not to worry about: fiscal problems.

Alaska had 626,932 residents as of the 2000 Census; Obama’s state senate district had 653,647. Alaska has no declining industry, no blighted inner cities (or the racial tensions that often accompany them), no aging infrastructure. No baby boomer entitlement crisis, no illegal immigrant crisis, no subprime mortgage crisis. And, contrary to the delusions of some, neither Alaska nor its governor are fending off Vladimir Putin at the Bering Straits or negotiating treaties with Ottawa. What exactly would you expect a governor of Alaska to do all day besides hunt, fish and flip-flop on the Bridge to Nowhere?

The only thing that occasionally makes Alaska difficult to govern is — Alaska Republicans. Go figure.

Palin’s apologists have a simple choice: either concede that experience isn’t particularly important, or continue to be rightfully mocked for the utterly asinine suggestion that serving four years as (part-time) mayor of Wasilla (population 5,470) and 20 months as governor of a nearly worry-free state that a college senior with a 3.3 GPA and a fully charged Roomba could keep neat and tidy, somehow compares to seven years in the Illinois State Senate and 32 months as a United States senator.

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