Columbus, OH – A new report, Unsustainable Spending: The State of Alaska’s Budget and Economy, released today by The Buckeye Institute’s Economic Research Center, found that raising taxes would not raise the revenue needed to address Alaska’s $1.6 billion budget shortfall, and would lead to fewer jobs for Alaskans.

The research was conducted in conjunction with the Alaska Policy Forum, a non-profit think tank that promotes policies that grow freedom for all Alaskans.

“Putting new taxes on Alaskans only burdens the state through reduced investment, a stagnant economy, and lower job creation, and it fails to cover the state’s current budget shortfall. The best path forward for Alaska is to reduce inefficient government spending that both solves their fiscal situation and has the greatest potential to generate economic growth,” said Andrew J. Kidd, Ph.D., economist at the Economic Research Center at The Buckeye Institute and co-author of Unsustainable Spending: The State of Alaska’s Budget and Economy.

Using a dynamic scoring model developed by economists at Buckeye’s Economic Research Center, the report’s authors analyzed four proposed tax plans that Alaska policymakers are considering to address the state’s projected $1.6 billion budget shortfall. The model’s findings give Alaska policymakers a better understanding of how each proposal would affect the state’s businesses, families, economy, and state revenues.

The model revealed the following first-year effects of the four proposals:

• Introducing a three percent sales tax would raise $200 million in state revenue and lead to 1,700 fewer jobs being created;
• Introducing a flat income tax would raise $276 million in state revenue and lead to 2,300 fewer jobs being created;
• Introducing a progressive income tax would raise $336 million in state revenue and lead to 2,700 fewer jobs being created and stagnant GDP by year eight; and
• Introducing a proportional income tax would raise $90 million in state revenue and lead to 700 fewer jobs being created.

Unsustainable Spending was authored by Andrew J. Kidd, Ph.D.; Rea S. Hederman Jr., executive director of the Economic Research Center and vice president of policy at The Buckeye Institute; Tyler Shankel, economic policy analyst at the Economic Research Center; and James Woodward, Ph.D., economic research analyst at the Economic Research Center.

Consistent with academic standards and methodologies, the Economic Research Center’s model has undergone a double-blind peer review and the model’s full technical description provided in the report’s appendices allows researchers to validate the model’s accuracy and the conclusions drawn.

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