Taking or taxing the PFD completes the socialist model

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GUEST CONTRIBUTOR
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By TUCKERMAN BABCOCK

The socialist urge is always strong.  Perhaps without even realizing it, Chris Nyman did a fine job in his recent column arguing for Socialism and state power over free enterprise, private ownership and individual freedom.

His objective was to take what little direct dividend individual Alaskans receive from the production of their shared ownership of oil and gas. He wants every penny owned to you to instead go directly to the State of Alaska.  He says it is to advance conservative policy, but his approach is like Emperor Montezuma sending wagons of gold to the Spanish hoping to appease their lust for more. It only made things worse.

We can and should dismiss his rhetorical statements of PFD “misconceptions” – none of which is true and none of which is discussed in his own column.       

Let us review facts.      

Back in the 1950s, the federal government forced Alaska to adopt a Socialist approach to subsurface mineral rights.  In most States, such as the Dakotas, Pennsylvania, Texas, Louisiana, etc., individuals own land, subsurface rights, and the wealth that comes from developing their land. The various State governments then tax the people to pay for programs and services.   That is the free enterprise and capitalist model.

With every subsurface well or mine the owners receive a royalty payment.   Royalty payments are income to the owners, not the State.

Alaska was forced down a Socialist path.  The State “owns” most subsurface oil and gas.  The people still own the subsurface minerals (oil and gas among them), but we own it collectively.  As former Governor Hickel sagaciously discerned, we are an Owner State. What do we do with this anomaly?

Now, if you want to go full Socialist, then every penny of value, not just taxes, but the royalty payment due the owners, should be gobbled up and retained by the State.  Nothing for individuals.  Only handouts from government. Full socialism.

The State would be supreme overlord, supreme judge, and supreme master of every such dollar.  Not one penny should go directly to the great unwashed, the little people who actually own the resource: those pesky individual Alaskans.

Rather than blunder down the full Socialist road, those that came before us exercised some good judgment.  Gov. Jay Hammond, the people through a constitutional amendment, and legislators in the late 1970s and early 1980s, decided that severance  taxes, production taxes, and misc. other taxes should flow directly to state spending.  But then they did something the Socialists, the politically connected and those that make a living off state spending did not expect. They recognized the rights of individuals to the subsurface ownership and provided for some benefit from that ownership.  At least a little.

They did not intercept 100% of the royalty payments due to the owners.  Instead, they set aside 25% of the royalty payment in a Permanent Fund.  That was the best they could do. They still intercepted and taxed the other 75% of the royalty payments actually due to the owners – that is, all individual Alaskans. 

Then they decided to allow the owners (individual Alaskans) to receive a dividend from the realized earnings of the Permanent Fund. The governor and Legislature set a formula in place that provided for approximately 50% of the realized earnings from the Permanent Fund to go directly to the actual owners of the subsurface minerals: individual Alaskans.

For more than 30 years the Permanent Fund grew and grew. The dividends were paid, never from taxes, never from any budget, but directly from the actual realized earnings of the Permanent Fund. The other 50% of earnings from the Fund were available to spend any way the government wished.

The statutory formula remains in full force.  But for now, it is another law ignored.

Enough is never enough for government. Spending grew and grew. The programs, salaries, benefits, buildings, and greed knew few bounds.

Severance taxes, production taxes, corporate taxes, gas taxes, fish taxes and half the earnings of the Permanent Fund…the government spent every penny.

There were times when government had so much money from those sources that billions upon billions of dollars were saved in the Constitutional Budget Reserve.  For the lean years.

What did most politicians and especially the Socialist utopians do with all those riches?

Spent every penny.

Borrowed every penny.

Ran up billions in debt in fantastical promises for pensions no one could possibly afford.  Underfunded by many billions of dollars.

And then government’s greedy eyes turned to the dividends faithfully paid to the owners of  so much of the oil and gas in Alaska: individual Alaskans.

It started with the scoundrel, former Gov. Bill Walker, who ignored state law and vetoed the transfer of the dividends to the people.  

Then legislators – long shy about imposing such a money grab and tax on the tiny dividend (a tiny share of the vast wealth generated by developing the oil and gas owned by all Alaskans) – became emboldened by Gov. Walker’s taking of the dividend. They stopped transferring the dividend – ignoring state law and capriciously setting whatever they felt like for a “dividend.”

These statists and Socialists hate the idea of individual ownership, individuals receiving a dividend from the royalty from their own oil and gas; they want every penny for government.  

Despite the view of folks like Chris Nyman, no wagons of gold paid as tribute will ever satisfy the bottomless greed of government.

Those who fear the taxman will go after them simply hope that by sacrificing all the little people and their dividends, the day of reckoning will be postponed.  The fact is that there is no limit to the appetite for spending, no limit to the growth, power and debt of government…except the determination of the people to limit the size and scope of government.

It is your money Alaskans. It is your oil and gas. It is your children who are now paying the price of the profligate and boundless growth and waste of government.  

If they take the dividend today, they will come with sales and income taxes tomorrow. Divide and conquer, a tactic used for centuries. Chris Nyman should know better.

Tuckerman Babcock has been an Alaskan since January 1966. He worked for five legislators, two governors, served 10 years with Matanuska Electric Association, 3 and 1⁄2 years as a commissioner of the Alaska Oil and Gas Conservation Commission. He has been a homemaker and former volunteer chair, Alaska Republican Party. Most recently, he chaired Gov. Mike Dunleavy’s transition team and was the first chief of staff (retired August 2019). He lives in Soldotna with his wife and family.

Alaska is in free fall, while legislative hoarders hoard

35 COMMENTS

  1. Nyman is an embarrassment to Alaska. People like him should never hold office. They are either disdainful of Alaska’s history or they truly are socialists who want to take away your money. We live in an owner state. The citizens of Alaska receive dividends from mineral wealth. That’s why it’s called a dividend program and not a hand out program. Sorry Chris, you should resign in shame.

  2. Absolutely. Government is like Monty Pythons’ Mr. Creosote, never to be satiated. No matter how much he has, he wants more and more until the whole system explodes. No to taking the PFD; no to new taxes until deep cuts are made; return to the spending line before the growth of the 2006 budget (Palin really started the climb when money was flush). There are those who claim, rightly, that people will be hurt, but is it better to break the cycle of dysfunction now or let it fester for more generations? When you have cancer, how long do you delay difficult treatment? Socialists are a cancer upon our society and the longer their misguided fantasies are allowed to perpetuate in Juneau the greater the ultimate pain for everyone when the bill comes due, but especially for those lulled into becoming dependent upon the largess of government for their every need. Let’s start the weaning process now.

  4. I’ll make a guess that most legislators in Juneau would agree with him. They have proven to be lazy and incompetent when it comes to the budget.

  5. I’ll make a guess that most legislators in Juneau would agree with him. They have proven to be lazy and incompetent when it comes to the budget.

  6. Perhaps if the Republicans had been doing their jobs we wouldn’t be as screwed as we are now.

    • If you look at the growth in the operating budget over the decades in relation to the party in charge you will see that republicans grew it more than democrats. They’re both self serving corrupt parties. I don’t know if the graph posts or not.

      https://3um88b32jzg41py2lr3fg1uh-wpengine.netdna-ssl . com/wp-content/uploads/2019/03/16124129_web1_AK-Oper-Budget-2.jpg

  8. Thank you Tucker for your excellent article.

    But it will fall on deaf ears and the blind in the legislature as they worry more about their re-election and campaign cash greed then they do about Alaskans. They have demonstrated repeated that they to not have the courage or will to do anything but bankrupt the State and spend every penny the can gather.

    They will continue until they exhaust every penny in the Permanent Fund. Increase fees and create new taxes so they can be re-elected. Look to California for the future Alaska.

    If the people want a small share of the wealth from our resources they will have to confront every legislator and demand they pay a full dividend or make sure they are not re-elected until they final learn they work for the people not just special interests and themselves.

  11. And here is the problem $80 billion invested mostly outside Alaska in OUR dividend account with fund managers raping and pillaging our fund. Has anyone here ever seen a figure on the fees we pay these parasites to manage the fund. ???? Are WE invested in Bank America, city bank or any other company that bashes Alaska’s interests ??? I’m sick of this crap.

  13. I couldn’t have said it any better. The only reason I want my dividend is to starve the government of money. They will never slow their growth unless there is legal limits, they will never cut unless there is no money left and no legal way to steal more from the masses. Government should never have a surplus, because they will always find a way to spend it and when the surplus goes away, they scream they have no where to cut. Once they start a program, they have no fortitude to ever cut it, no matter how bloated and worthless it becomes. They make pretenses to, but in the end just rename it or shift the money somewhere else. Lets budget with the same numbers of, lets say 1990, adjusted for inflation. The so called budget crisis would be solved.

  15. Stop the greedy oil corporations from looting the taxpayer. The $17 billion budget reserve is gone and BP is gone.

  17. Tuckerman did a great job in explaining this part of Alaska history and the reason every Alaskan has the right and duty to STAND UP against this socialist grab of YOUR PFD

  19. This article is the most honest, straight forward commentary on the reality of what has become a spending spree of epic proportions by legislators over the last 40 years. Grand theft or embezzlement is what this would be called in the private sector.

    • This article complete ignores the reality that a forward looking, so-called socialist state was remarkably prescient and effective at turning its oil wealth into a self sustaining fund that provides a high standard of living for all its citizens.
      If you’d like that to happen in Alaska, ask the Norwegians how they did it.
      Oops, too late. We already squeezed all the golden eggs out of that goose.

  22. Be honest, it’s been the right wing supporters of the oil companies who have been pushing for use of the PFD since it’s inception. Why tax big oil when the PFD is right there in its billions just begging to relieve the poor overtaxed oil companies, cutting into their vast profits?

  23. Right on, Brother. We won’t need a personal income tax. We simply need to skinny down the agency bloat and use the money to bridge the time period necessary to rebuild our economy.

    Jim

  26. Guest contributor is an emotional cripple incapable of understanding simple concepts . PFD stands for Permanent Fund DIVIDEND. Profits generated from investments of oil revenues from mineral leases let by the land owner (the State of Alaska). It is a legislated benefit based on the performance of Alaska’s Permanent Fund investments. In that respect only, is it an entitlement. But guest contributor has misconstrued the PFD as an unalienable right. Guest contributor feels entitled to the PFD which is essentially, the State government giving out cash. And he’s whining that if the state doesn’t keep handing out cash it is somehow ‘Socialist.’ How do people like guest contributor even get published on mustreadalaska.com? This is not must read, it is trash to wind up people that call themselves conservative, into a frothy mess of fear and anger. Please, if you’ve read this far, help others to understand that their brain is not ornamental. It is intended to be used – no matter how poorly treated it has become.

    • …….comment above written by one of those Socialists to which Babcock’s opinion article speaks. Socialists just hate the Truth asserted against them. Name-calling and personal attacks are the arguments they use, like a 7th grade retort.

  27. Thanks for the Vent should go back to school and learn how to read. Mr. Babcock clearly stated the history and facts concerning who owns the resources and why the people get a very small share of the profits from our resources.
    His entire post was false from the beginning and shows that he is a rabid member of the Socialist in AK today. Nothing he said is true! The Feds created the ownerState and the resources belong to the residents not the government. The PFD was created to keep the legislature from spending all of the profits and is the only thing stopping them now.

    His attitude is what the legislature and those that can’t stand the residents getting anything equally from the State use this false narrative to justify their greed and desire to have every cent earned to spend on their pet projects of income transfer and building a dependent needy voter to keep them in power.

    The silent majority has done nothing to stop them until now. But we maybe realizing we have to stand up and fight this socialism. First at the ballot box and our voices and if that fails stronger measures.

    I don’t need to defend Mr. Babcock he is more than capable but the commenter accused all residents that know and believe the truth as being greedy and wrong. “NOT” he is the greedy one and totally wrong.

  28. What a screed by Tuckerman. So much misinformation and so much of it. R’s need to stop him before he destroys the party. He is living in lala land….

    • The PFD was an egregious misnomer from inception. It should have been named the PAD…….Permanent Account Dividend. The Supreme Court could have then properly ruled that an “account” was not the same thing as a “fund,” therefore not violating the law and not preventing distribution from the statutory formula. If the legislature correctly redefined the “account,” the SCt., in it’s infinite wisdom, could reverse itself and allow the statutory formula to remain as controlling law.

  29. Great piece Mr. Babcock! This should be required reading in Alaska’s schools and for every legislator registering with APOC to run for office.

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