OPPOSES INCOME TAX: Robert Gillam doesn’t exactly know where an income tax proposal might come from during the 30th Alaska Legislature, which convenes this week in Juneau.
But he figures one is going to materialize in the next 90 days. To be on the safe side, he’s not taking chances.
Come Tuesday, while legislators in the House and Senate get busy in their committees, Alaskans will see large ads appear in most of the major newspapers in Alaska — Juneau, Kenai, Anchorage, and Fairbanks.
Bob Gillam’s name will be on the “paid for” line at the bottom of them. The ads will, in no uncertain terms, oppose a state income tax.
The print advertising, social media posts, and radio spots to follow are Gillam’s next contribution to the discussion about how to fix Alaska’s state budget problem.
In his view, piling more taxes onto small business owners is going to hurt the economy of Alaska. Right now, when the economy is on its knees, is not the time to soak mom and pops.
Last year, Gov. Bill Walker introduced a host of taxes, including a state income tax. This year, the governor has removed himself from that fiscal fiasco, and is only introducing a motor fuel tax. He may work through friendly surrogates in the Alaska House to get a tax plan in place.
Gillam is ready. He’s run successful campaigns before. He helped derail the Pebble mining project back in 2008 by going big and bold on messaging about Bristol Bay, and now he’s girded for battle on income taxes, which he says will do nothing but hurt working Alaskans.
Does he, as the richest man in Alaska, have a dog in the fight? Not as much as one might think on a personal level. People with the investment savvy of Gillam, who has $7 billion in assets under management, including a portion of the Alaska Permanent Fund, can find workarounds for their federal tax bills, which is what the state income tax bill would be calculated from.
The real people hurt by a state income tax are those who don’t have the means to work all the tax advantages provided by the Internal Revenue Service to the high-dollar taxpayers. Gillam knows that.
Sitting down with Gillam for an hour last week, we heard about what the investment expert is thinking on the topic: It’s all about small businesses in Alaska.
The man who founded McKinley Capital in Anchorage deals with a lot of big businesses in his daily duties as a money manager.
But to hear him talk, his heart is with the start-ups, the entrepreneurs who risk everything to create an enterprise, whether it’s an auto detailing shop or a hair salon. He pulled out reams of reports from the likes of the Brookings Institute and American Legislative Exchange Council to show how state income taxes drag down economies.
Gillam asked the rhetorical question: “If a small business owner does well and can support himself or herself and then has some profits left over, what happens next?”
“The business owner expands. Buys new equipment. Opens a new outlet across town,” Gillam answered.
“The small business community nationwide and in Alaska is your job generator,” he said. “Everyone thinks it’s ConocoPhillips and BP, but there are more jobs in small business environments than in the oil companies combined. The last thing you want to do is to impair your job generators.”
That was also the message he gave to about 80 Alaskans who attended an intimate inaugural party in Anchorage on Jan. 7: Pay attention to what is going on in Juneau. Make sure lawmakers don’t tax average Alaskans.
There are 17,000 small businesses in Alaska, which Gillam defines as a business with between two and 200 employees. They already struggle under the burden of federal taxes, including the 21 taxes under Obamacare, some of which will hit small business owners this year for the first time.
“When a person goes into business, they look at risk and reward. The truth is that at $250,000, filing jointly, the married tax bracket is now 44.25 percent. Under President Bush it was 30 percent,” Gillam said. The risk-reward went negative.
Obamacare is clearly another thing that Gillam thinks is hurting not only small business owners, but the nation as a whole.
“They have 21 separate taxes in the Affordable Care Act,” he said. “It’s no wonder that gross domestic product growth under Obama has been, at times, less than 1 percent.”
WILL WALKER PUSH INCOME, SALES TAXES THIS YEAR?
Gov. Bill Walker ran for office on the promise he would not tax Alaskans. On Oct. 11, 2014 he said, “I have no intention to implement a statewide tax or paying for state government by reducing Permanent Fund dividend checks. If we properly develop our natural resources and put in place a sustainable budget, that should not be necessary.”
By 2016, Walker was reaching deep into to the pockets of Alaskans, with proposed taxes on income, sales, fish, mining, oil, motor fuel, and cruise ship passengers. He eviscerated tax credits to the small oil companies that came to Alaska to explore because of them.
By July, the only tax he could manage to get was a 50+ percent tax on every Alaskan’s Permanent Fund dividend. He just delivered that tax by way of a veto, knowing the Legislature was too dog-tired to fight him any longer.
It did not work out so well for Walker. Stung by the public’s disapproval, the governor is now letting others take the lead, such as Homer Rep. Paul Seaton, who is now co-chair of House Finance, and Rep. Les Gara, who is vice chair and is taking over for Rep. Neal Foster, who has the title of co-chair, but who has moved to the Fourth Floor to continue the Friday traditions of his father, the late Rep. Richard Foster.
Seaton in 2015 proposed a bill to take 15 percent of taxpayers’ income as defined by federal tax law. The bill was cosponsored by incoming Speaker Bryce Edgmon. The tax would also have applied to income earned from property in Alaska, investments, trust funds, and other royalties. Gara has been a diehard proponent of corporate taxes and more levies on oil.
As the battle begins in Juneau between the “spend less” and “spend more” factions, Alaska’s economy continues to falter.
But Robert Gillam is not standing by idle. He’ll be deeply involved. And look for the advertising departments of Alaska’s various newspapers to be deeply appreciative that he is.