No surprise from Buckeyes: Ohio experts give Dunleavy no-tax advice

This was easier than my guess on the Nenana Ice Classic, which was more than a week off.

I guessed that when the Dunleavy administration asked for advice from the Alaska Policy Forum and the Buckeye Institute, part of the Koch Network, the answer would be that Alaska should avoid taxes at all costs.

Sure enough, the experts from Ohio have delivered.

Earlier this month, the head of the forum, Bethany Marcum, and one of the report authors from Ohio said I was in no position to describe the report before it was released.

“The author has not seen the report and only referenced unrelated publications in an attempt to comment on what the forthcoming report will address,” they complained, acting as if even Carnac the Magnificent would have been stymied.

Carnac, a mystic from the mysterious East, knew all the answers, even before he had read the questions.

To no one’s surprise, the experts from the East recommend against taxes and don’t analyze the impact of reduced services on Alaska.

“Alaska must continue to resist the temptation to introduce or raise growth-killing taxes that stymie private investment and hinder job creation,” the Buckeyes said.

“The solution to Alaska’s problem lies in restraining government spending and adopting pro-growth economic strategies that will generate higher future tax revenues and greater prosperity for businesses and residents. Prudence demands that Alaska make some difficult decisions today in order to ensure a better tomorrow.”

The Ohio experts don’t mention that Alaska has the lowest tax burden in the country and many of its residents think that good schools and functioning public services are a key to the state’s economic future. It must be hard to see that from Columbus.

There is no special benefit to individuals from services like education in their model and they act as if all investment comes from residents of the state. The Ohio crew would benefit from a visit to the North Slope.

There is a good deal of Buckeye Boilerplate in the Alaska report. Much of what it says was also included in the pages of a report by the same four authors released on Feb. 21, “Sustaining Economic Growth: Tax and Budget Principles for Ohio.”

“A competitive equilibrium is such that given the set of exogenous processes, households solve the household utility maximization problem, firms solve the profit maximization problem, and the capital and labor markets clear,” both reports say.

The authors use the same model and the same structure to render a verdict about taxes. Their main argument is that the data is complicated and they’ve got this all figured out.

I doubt that a one-size-fits-all model works in Alaska as well as any other place. Plus, the four Buckeyes are making some grand pronouncements in their report without really knowing much about the history of studies on the Alaska economy.

They proved that with one sentence.

“Economists warned of Alaska’s oil-related budget problems since at least 2011 when Scott Goldsmith with the University of Alaska Anchorage Institute of Social and Economic Research likened the state’s dependence on oil revenue to a drug addict needing a ‘fix,’” the Buckeyes said.

Limit most of your research to newspapers available online and this kind of thing happens.

Anyone with real expertise in the history of Alaska and its economy would laugh at the stunning lack of research regarding the decades of analysis by Goldsmith and others at ISER about “oil-related budget problems.”

The best research done so far on the current Alaska dilemma is the 2016 ISER report that the Buckeyes didn’t mention, challenge or appear to have read. They should do so.

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Dermot Cole8 Comments