Michael Tavoliero: The End Run – How Politicians Transformed the PFD Into a Hidden Tax 

By MICHAEL TAVOLIERO

Once, Alaska was a place where government served the people. Our constitution promised maximum local self-government, and the Permanent Fund Dividend (PFD) stood as a revolutionary covenant between every Alaskan, rich or poor, sharing in the wealth of our land. 

The dividend was more than a check; it was a statement of fairness, equality, and ownership. It was the answer to an ancient problem: how to prevent government from converting public wealth into political power. 

In 2018, the Legislature swapped Alaska’s long-standing statutory PFD formula for a new contrivance, the Percent of Market Value (POMV) draw. Under this device, up to five percent of the Fund’s average market value could be withdrawn each year for both dividends and government spending. 

Alaskans since its inception were told the dividend was rightfully theirs, but in a stunning sleight of hand, one Democrat union affiliated state senator, aided by the Alaska Supreme Court, used lawfare to stack the deck.  

Thus, we saw the rules changed mid-game, the odds further favored the house, and government coffers got fatter.  

In a blur of sleight and statute, lawmakers dealt from under the deck. From that moment, the people’s share was not merely diminished, it was devoured. Each new session, legislators shoveled more into the maw of government, leaving only the crumbs for those who owned the wealth to begin with. 

The PFD, once a symbol of shared ownership, became a line item to be trimmed or withheld according to political mood. Without passing a tax or seeking public consent, lawmakers quietly turned the people’s share of resource income into operating revenue. That is not budgeting. It is appropriation by stealth; the creation of an untitled, unvoted, and unnamed tax. 

A Tax by Any Other Name 

When lawmakers withhold a portion of the dividend from Alaskans and spend it for general purposes, it effectively levies a uniform per-person charge, also known as a head tax. The difference is only procedural. Instead of sending a bill, the government withheld what was already yours. Economists call this a reverse transfer. The outcome is identical to a tax increase. State revenues rise, household incomes fall, public unions win, and citizens lose.  

The diversion of POMV funds equates to roughly $4,700 to $7,000 per person per year in Alaska under the “head tax” analogy. That cost represents roughly 5–6% of median household or per capita income in Alaska.  

From Citizen Shareholder to Colonial Subject 

To understand what Alaska is losing, we must recall what it once achieved. Historian Charles Beard observed that England’s first American colonies were not civic communities but chartered corporations. Trading companies were endowed by the crown with land, treasuries, and taxing power for investors across the ocean. Albert Jay Nock described them as “autonomous States”, early models of governments in which rulers and taxpayers were divided by class and distance. 

The Alaska Permanent Fund Dividend was built to reverse that model. It placed ownership of Alaska’s resources in the hands of its citizens, not a governing class or distant investor. It declared the sovereign in Alaska is the individual, not the bureaucracy. When the state reduces the dividend to fund itself, it re-creates the colonial relationship Nock warned about: a political corporation exploiting the very people it was meant to serve. 

The Regressive, Hidden Tax 

The PFD reduction is the most regressive tax in America. A $1,000 loss barely touches a six-figure household but can mean heating oil or groceries for a working-class family. It hits hardest in rural and lower-income communities, yet it is imposed without law or equity. 

Under Article IX, Section 1 of Alaska’s Constitution, only the Legislature may levy a tax—and only by statute. Yet no law was ever passed declaring, “We are taxing Alaskans by diverting their dividends.” Still, that is precisely what occurred.  

Without the word “tax,” the act became one in fact: a compulsory, uniform exaction on every eligible Alaskan, imposed without statute or consent. In a surreptitious end-run around constitutional process, lawmakers fattened the bureaucracy by quietly reclaiming the people’s share, executing a head tax in everything but name and taking it straight from the tables of Alaska’s families. 

A Quiet Reversal of the Revolution 

Under the statutory formula, every Alaskan was a shareholder in the state’s wealth. Now, citizens have become a revenue source. Government takes its share first and calls the remainder “the people’s portion.” The citizen-owned economic structure that once made Alaska exceptional has been inverted. 

This is not fiscal discipline. It is a regression toward the corporate-state model our Framers rejected. Alaska’s constitution, particularly Article VIII, was written to protect against monopolization and rent-seeking to guarantee “common use” and “maximum benefit.” The PFD was the living embodiment of that philosophy. By diverting it, lawmakers eroded the constitutional wall meant to separate public trust from political discretion. 

The False Choice 

Politicians claim the choice is between smaller dividends or new taxes. That is a false dichotomy. The state has already chosen taxation. It just refuses to name it. If Alaska truly needs to tax its citizens, then say it. Debate it in the open. Let the people see who stands for what. But do not disguise confiscation as “budget restraint.” Do not take from the public trust and pretend fiscal virtue. 

The Moral Geometry of Ownership 

The PFD was never an entitlement. It was the distribution of ownership. A modern public-trust instrument balancing the power of the state with the sovereignty of citizens. Weakening tilts that balance toward dependence and hierarchy. It tells Alaskans their government can appropriate the people’s property at will, under the guise of fiscal necessity. 

The Framers of our constitution envisioned a self-supporting state, but one that would never sever the people from their resources. When government treats citizen ownership as a line item to be reallocated, it crosses from stewardship into exploitation. 

A Test of Civic Courage 

If lawmakers believe the people must sacrifice their dividend for the state’s solvency, they should say so plainly and first cut waste, fraud and abuse from the budget. Anything less is political evasion. An honorable government does not hide its taxation behind lawfare as this one state senator did. 

Restoring the full statutory PFD is not a handout. It is a reaffirmation of the principle that Alaskans own Alaska. Sovereignty flows upward from the people, not downward from the state. 

The Choice Ahead 

The question before us is not merely about the dividend’s size. It is about whether Alaska will return to a citizen-owned commonwealth or continue practicing the colonial model where a governing elite administers public wealth for its own purposes. 

When leaders quietly withhold what law and equity promised through weaponized litigation, they have not balanced a budget; they have imposed a tax without consent. And they have done so without the courage to name it. 

Michael Tavoliero is a member of Eaglexit, Inc., a community advocate for local self-government, and a resident of Eagle River, Alaska.