Sarah Palin and Taxes
When it comes to taxes, Sarah Palin turns out to be an intriguing mix of Barack Obama and John McCain. Like Obama, she favors a tax rebate for consumers funded by a windfall profits tax on energy companies. But, like McCain, she also backs a gas tax holiday.
Of course, Alaska isn't like anywhere else. Ninety percent of its tax revenues come from oil, while state spending per capita is by far the highest in the nation. Still, since John McCain picked the once-obscure governor to be his running mate, the history of Palin's tax agenda suddenly matters.
Last year, soon after becoming governor, she proposed raising taxes on energy producers, an idea McCain strongly opposes. The legislature boosted the tax on oil pumped from state-owned land, with the rate increasing when prices exceed a benchmark of $52-a-barrel. Palin signed the bill and, this year, the new tax is expected to bring in more than $5 billion. That is a staggering sum for a state which projects only about $13 billion in total revenues.
This year, Palin redistributed a big chunk of that windfall. The legislature passed her plan to give Alaskans a $1200 rebate (on the top of the $2000 each Alaskan gets as an oil dividend) and suspended for a year the state's 8 cent per gallon tax on gasoline. For another look at this, check out the Don't Mess With Taxes blog.
Not surprisingly, Palin's energy tax is strongly opposed by big oil. Even though she supports more drilling in
Palin's tax history as mayor of the small Alaska town of Wasilla is similarly mixed. According to the Anchorage Daily News, she was first elected as a supporter of a newly-imposed 2 percent sales tax. Those tax revenues helped fund the infrastructure that made the town a magnet for big box stores. Thanks to the sales boom, revenues soared.
All that growth made it possible for her to slash the sales tax rate to 0.5%—a step she used to help promote her run for governor. But she did not cut town spending. In fact, its operating budget increased from about $4 million to $6 million during her tenure.
Palin also forced out six of the town's top department heads, including its police chief, in an eerie precursor to her controversial decision to fire the state's public safety commissioner. At the time, she told a local paper, “Some of the things I'm doing, it's obvious I'm not running for Miss Congeniality. I'm running the city.”
All in all, Palin has a mixed, if limited, record on tax and spending. But, unlike her history on social issues, it is not one that will necessarily thrill the GOP base.