Hypothetical Situation:
Let’s say there’s a community with a population of 2500 people that have
an employment participation of about 1200.
Then let’s say that the average income is about $50,000.00. Under the current flavor of the proposed
income tax bill, an Alaskan earning $50000 will pay about $620 filing jointly
or $800 filing singly. *** Now, multiply the median of those tax liability
numbers (710) with the number of taxpayers (1200) and you come up with $852,000.00*.
That’s how much money would be pulled from the private
sector and sent directly to the government.
If one considers that maybe 50% of that amount would be spent in local
commerce and taxed at 6%, the revenue loss to a municipality would be about $25,000.00*
initially.
Now… Let’s also throw in the removal of say $1,000.00 of
Permanent Fund Dividend money. Although
the exact numbers are difficult, with a somewhat transitional population, let’s
say that 2/3s of the 2500 receive a PFD, What we get is:
2500 X .66 = 1650 X
$1000 = $1,650,000.00 X .5 (local spending) = 825,000 X 6% Sales Tax = $49500
Lost Tax Revenue*
Approximate Annual Tax Revenue Loss under the current
legislative plan: $75000**
Local Spending Reduction Estimate Totals:
Income Tax $426000*
Dividend
Reduction +825000*
Total: $1,251,000 removed from the local economy.*
* This number does not reflect the commerce multiplier. That multiplier would indicate that monies
revolve through a community and have more than just one impact point upon local
taxes and general economic strength. The
multiplier tends to be higher in rural or isolated communities and could even
indicate that the actual impact upon an Alaska Bush community would be much
more critical.
** The taxing authority will be looking to replace that lost
income with a new or modified revenue source.
This will also serve to reduce the monies in the local economy and fall
under the impacts aforementioned multiplier, thus negatively impacting the local
economy even more.
***Income Tax numbers were culled from an email that was
sent out in a press release from the Alaska House Republicans on March 28, 2017.
