Tuesday, September 2, 2008

The Myth of Sarah Palin as Tax Cutter and Budget Cutter

Anne Kilkenny reports from Alaska:

During her 6 years as Mayor, she increased general government expenditures by over 33%. During those same 6 years the amount of taxes collected by the City increased by 38%.

She inherited a city with zero debt, but, despite the increase in taxes,left it with indebtedness of over $22 million.

What did Mayor Palin encourage the voters to borrow money for? Was it the infrastructure that she said she supported? The sewage treatment plant that the city lacked? or a new library? No. $1m for a park. $15m-plus for construction of a multi-use sports complex which she rushed through to build on a piece of property that the City didn’t even have clear title to, that was still in litigation 7 yrs later--to the delight of the lawyers involved! The sports complex itself is a nice addition to the community but a huge money pit, not the profit-generator she claimed it would be...While Mayor, City Hall was extensively remodeled and her office redecorated more than once.

And as governor, as I have already pointed out. Palin proposed a $750 million oil tax increase (bad enough). But it came out of the legislature at over $1.5 billion. According to Alaskan Andrew Halcro, "she signed it saying she thought it was close enough."

Palin signed into law a $6.6 billion operating budget—the largest in Alaska's history.

Palin proposed giving Alaskans $100-a-month energy debit cards. Of course, basic economics teaches the last thing you want to do, when a commodity is rising in price, is to encourage consumption. She also proposed providing grants to electrical utilities so that they would reduce customers' rates, again the last thing you want to do. She subsequently dropped the debit card proposal, and in its place she proposed to send Alaskans $1,200 directly.

In October 2007, Palin called a 30-day special session to raise the state's oil tax rate.

The governor's plan is called Alaska's Clear and Equitable Share, or ACES. Clear and equitable share? Doesn't sound very free market oriented--and it isn't.

It raises the state's current net profits tax on North Slope oil from a 22.5 percent to 25 percent base. There's also a "progressivity" surcharge where generally, when oil prices rise above roughly $50 a barrel, the tax rate increases by another .2 percent for each additional dollar a barrel. Thus, at $100 per barrel the tax jumps to 35 percent.

The bill also has a tax floor, at $40 per barrel. Palin said of her bill:

Progressiveness is the additional share we capture when oil prices and profits are high. I chose to set the progressiveness knob [i.e., the windfall profits tax] at a relatively low level in exchange for more security when prices are low. We accomplished this through a gross tax floor at our legacy fields. If the Legislature chooses to discard that floor, then the knob on progressiveness needs to be set higher — to make sure we capture a more equitable share when prices are high and profits extraordinary.

No tax cutter or budget cutter here.

Kilkenny report via Andrew Sullivan

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