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This is the Alaska socialist program which Governor Palin takes credit for

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whistle Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Oct-29-08 01:57 PM
Original message
This is the Alaska socialist program which Governor Palin takes credit for
...which was in place BEFORE Sarah Palin was elected as Governor:

CITIZEN DIVIDENDS AND OIL RESOURCE RENTS - A Focus on Alaska, Norway and Nigeria
by Alanna Hartzok
Scotland, PA
March-April 2004


The Alaska state constitution claims common heritage rights of ownership of oil and other minerals for the people of the state as a whole. Citizen dividend checks are distributed every year in Alaska out of the interest payments to an oil royalties deposit account called the Alaska Permanent Fund (APF) created in 1976 after oil was discovered on the North Slope. The APF is a public trust fund - a diversified stock, bond and real estate portfolio - into which are deposited the oil royalties received from the corporations which extract the oil from the lands of Alaska. The first citizen dividend check from the interest of the APF was issued in 1982 and was for $1000 per every person for everyone in Alaska who had resided in the state for at least one year. Annual citizen dividends have been issued every year since then, for a total of more than $23,000 per person.

In 2003, each of the nearly 600,000 Alaska US citizens (residents of Alaska for at least one year) received a check for $1,107 from the APF. The total amount dispersed was $663.2 million. The $25 billion investment fund's core experienced stock market losses which led to the dividend's decline this past year compared to the several previous years. The amount was $433 less, a 28 percent drop from the 2002 pay out of $1,540, and a 44 percent decrease from the all-time high of $1,964 in year 2000. The amount changes based on a five-year average of APF investment income derived from the bonds, stock dividends, real estate and other investments.

Alaska relies on oil for about 80 percent of its revenue and has no sales or income tax. Alaska state government is mandated to invest 25% of its oil revenue into the APF while the other 75% of oil royalty revenue is dispersed to other government funds to finance education, infrastructure and social services. If 100% of Alaska's oil royalties had been deposited into the APF, it is conceivable that the CD this year could have been about $4,400 or $17,600 for a family of four. But then there would have been no funds for roads, education and other public services and no funds available to run the state legislature - a libertarian dream fulfillment or a social and economic disaster, which one we will never know. If state services were to have been maintained while 100% of oil royalties were deposited in the APF, there would of course have been the need for income, sales and other taxes on wages and production.

At the end of the 2002 fiscal year, the state of Alaska had a deficit of nearly $400 million. State lawmakers frequently debate whether the APF should be used to help run state government, but the Fund is protected by law from being used for government expenditures. Rather than cutting into the Fund and citizen dividends, others are proposing an increase in oil rents and royalties from oil corporations.

On February 5th of this year of 2004, several Democratic Representatives filed legislation to help Alaskans recover a fairer share for their oil. That same week former Alaska Governors Jay Hammond and Wally Hickel stated that it is time to review the fairness of oil tax exemptions contained in a 1989 law known as "the ELF", or Economic Limit Factor. Their viewpoint is that ELF gives unjustified tax exemptions. The Alaska Fair Share bill would redress the Economic Limit Factor and meet the constitutional obligation to make sure Alaska's oil provides "the maximum benefit to the people" as mandated by the state constitution.

Because of the ELF statute tax breaks, Alaska's oil production tax rate has plummeted from 13.5% in 1993 to 7.5% today, and by 2013, it would be down to 4% if the law is not changed. Also because of ELF, 11 of the last 14 fields developed since 1989 pay none or almost none of Alaska's 15% Production Tax. While the state's share for Alaska oil has fallen, corporate oil profits have soared. BP and Conoco Phillips reported net earnings of $9 billion and $7 billion respectively last year. According to the Department of Revenue, at recent oil prices of $30 per barrel the annual share corporations receive for Alaska oil would exceed total state oil revenue by $1.2 billion.

The Alaska Fair Share bill establishes a modest minimum production tax of 5% and would raise an additional $400 million in revenue this year. That approximates the current state budget gap. The bill raises more at higher prices per barrel, and an additional $100 million at average prices, according to the Department. The bill also lets the state share in profits above $20 per barrel by slowly increasing the severance tax above that price. To encourage development, the Alaska Fair Share bill reduces the severance tax rate at low prices, when companies face the prospect of reduced profits, and possible investment losses.

Passage of the bill would alleviate state government expense shortfalls, and would possibly result in higher citizen dividend payments as more funds would be deposited into the APF. We cannot predict this for certain, however, as the CD's come from the investment portfolio interest, are averaged over a five year investment period, and determined by the portfolio performance.

We do know that due in large part to the citizen dividend payments combined with the happy consequences of no state income or sales taxes, Alaska is the only state in the United States where the wealth gap has decreased in the past decade. The citizen dividends from the APF are an important and significant source of income, especially for rural families maintaining more land based subsistence lifestyles.
<MORE> look:

Palins Alaska: Funded by Oil Profits Tax

If Sarah Palin gets past this press cycle and remains the Vice Presidential nominee on the GOP ticket, there might be one interesting item from her brief tenure as governor of Alaska that would be worthy of discussion on the national stage -- her state's windfall profit sharing from oil leases. It turns out that every person who has lived in Alaska for over a year gets a $3,200 payout from the government thanks to taxes on oil companies; a family as large as Palin's would receive over $22,000 a year.

Sure, you'd be hard pressed to live off that. (Some might try.) But who wouldn't mind that scratch just because you live in an oil-rich state?

No wonder she is popular with voters in a state whose residents pay no income or sales taxes but are blessed with state coffers rolling in cash at a time when all other states are suffering. Indeed, when the oil companies pay more taxes to the state of Alaska, they get to write that off against their federal tax obligation, leaving the rest of us to make up the shortfall.

But wouldn't it be -- I don't know -- communism to take money from the oil companies and give it to citizens? Not according to Governor Palin. When John McCain says that she "took on" the oil companies as governor, what he means is just that -- she raised taxes on oil companies.
<MORE> /

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Winterblues Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Oct-29-08 02:20 PM
Response to Original message
1. Ain't it great?
Not jealous are you?
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whistle Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Oct-29-08 10:39 PM
Response to Reply #1
2. Not at all, I wish all of America operated this way, put it right into
...the U.S. Constitution :blink:
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Winterblues Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Oct-30-08 09:41 AM
Response to Reply #2
3. You would be amazed at how many people
Want the opposite. Reminds me of a story I heard in third grade. My third grade teacher told this story about a family in Russia that owned a goat and the neighbors complained about them owning a goat and they didn't. The government asked them what they wanted the government to do about it and the neighbor said "Kill the Goat"
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