Just because few to none of Alaska’s elected officials are talking about bringing back the personal income tax is no reason to ignore its anniversary.
OK, maybe it’s weird to celebrate your anniversary with an ex, but it’s different with the state income tax. Whereas you’re unlikely to remarry an ex, Alaskans eventually may reunite with the tax. Not willingly, of course. More like a shotgun wedding based on financial necessity.
It was 75 years ago this month that the territorial Legislature enacted Alaska’s first personal income tax. It was also 75 years ago this month that the first daytime daily soap opera appeared on TV, and that Silly Putty went on sale.
Quite the diverse trio of diamond anniversaries.
Alaska divorced itself from the personal income tax in 1980 when a majority of legislators thought the state’s newfound oil wealth was like Silly Putty — you could reshape, reuse and replicate it forever. Not exactly true, but the ensuing debate over whether to restore the tax has endured longer than a soap opera, with about as much drama and the same recurring message: Tune in next week to see if the couple gets back together.
Back in 1949, the Legislature adopted a personal income tax for the simple financial reason that the territory was running out of money and the federal government had grown tired of subsidizing the Far North.
Gov. Ernest Gruening tried in 1947 to win legislative approval for an income tax, making the point: “Individuals and businesses deriving substantial livelihoods from the territory pay nothing at all. This is not as it should be.”
It’s the same argument supporters of the tax make today: People and businesses that enjoy the benefits of government services should contribute to paying the bills. Gruening was unsuccessful in 1947, just as advocates of bringing back the tax have been for years.
But two years after the governor made his pitch, enough legislators changed their mind and joined hands in grumpy tax matrimony. “By 1949, there was no choice but to put the income tax in,” Terrance Cole, noted Alaska historian, said in a 2017 interview. “And even then, it was a struggle.”
It was about more than just raising money for public services. Adopting the tax was about showing Congress that Alaska could support itself and was worthy of statehood — much like tax advocates today argue that we need to bring back the tax to show investors, lenders and businesses that Alaskans are willing to pay their way.
The enactment of a broad-based tax helped pave the way for statehood in 1959,” explained a 2004 report from the Institute of Social and Economic Research at the University of Alaska Anchorage. “Without the income tax, it is likely that Alaska could have never become a state and would still today be a territorial ward of the federal government. Without the 1949 income tax there would be no state lands, no state oil lease sales, no Prudhoe Bay windfall, and no Alaska Permanent Fund.”
Maybe, in time, more Alaskans will learn the history and purpose of a state income tax and accept it as the smart choice amid declining oil revenues. Everyone’s got to help pay the bills for public services.
Back in 2018, I worked a session for Kotzebue Rep. John Lincoln, who had become an instant House member when he was appointed to fill a vacated seat. One day, a co-worker in the office asked me a question about some long-standing policy issue. After I answered, she asked: “How did you get to be so smart?” I told her I was 66 years old and had a lot of years to learn. “I hope it doesn’t take me that long!” she said.
I could say the same thing about a state income tax: I hope it doesn’t take us too long.
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