This presentation is to supplement the 3.4.2021 LegFin Presentation to the Senate Finance Committee to analyze the distributional impact by income bracket of the level of PFDcuts discussed there.

1. Distributional Impact of
Proposed PFDCuts on Alaska
Families by Income Bracket
Supplement to 3.4.2021 LegFin Presentation to SFIN
March 7, 2021

2. Why a Supplement
1. While LegFin’s 3.4.2021 Presentation to SFIN analyzed the impact on
the overall budget of three sets of proposed PFDcuts, LegFin did not
analyze the distributional impact of those cuts on Alaska families
(the so-called #WhoPays issue) or the impact on the Alaska
economy
2. The purpose of this supplement is to provide the distributional
impact of the cuts on Alaska families (#WhoPays)
3. The impact of the cuts on the Alaska economy is in process
applying the analysis included in the ISER’s March 2016 “Short-Run
Economic Impacts of Alaska Fiscal Options”

3. Methodology
1. ITEP’s December 2020 Report, “Comparing Flat-Rate Income Tax
Options for Alaska,” calculates the impact by income bracket for
each $500 reduction in the PFD
2. This analysis uses the data from that report to calculate the impact
by income bracket for two cases:
a. The reduction from the Statutory PFD to POMV 50/50, $1000 PFD
and $500 PFD (the reductions analyzed by LegFin), and
b. The reduction from a POMV 50/50 PFD to $1000 PFD and $500
PFD
3. This analysis focuses on the anticipated FY 22 PFD, calculating the
Statutory and POMV 50/50 PFD’s using data from the APFC’s
January 2021 “History & Projections”

4. Conclusions
1. As all three of ISER’s 2016 and ITEP’s 2017 and 2020 reports make
clear, using PFDcuts to balance the budget (compared to other
types of supplemental revenue) disproportionately impacts middle
and lower income Alaska families (i.e., are regressive)
2. This analysis confirms that, finding that PFD reductions of the levels
analyzed in LegFin’s 3.4.2021 Presentation takes substantially more
as a percent of income, from middle & lower income Alaska families
than from upper income Alaska families
3. The differences are stark: in each case, using PFD reductions to
balance the budget takes 10x more as a percent of income from the
Lowest 20% of Alaska families than from the Top 20%