Anchorage: Property Taxes, Sales Taxes or Combination?

Unbelievable: Here's a chart that citizens of Anchorage should see.

By: Bob Griffin

It’s time for a local sales tax to reduce Anchorage’s exceptionally high property taxes. Anchorage is one of the only major tourist destinations in the world that doesn’t collect any sales taxes from our many visitors. These visitors, commuters, and summer hires who work, eat and shop in town, contribute very little in the form of tax revenue to the infrastructure and services they use while in our fair city. It is ironic that many of Anchorage’s public employees, who are paid through our property taxes, live in the MatSu Valley because of the high property taxes.

Anchorage’s very heavy reliance on property taxes as the primary source of revenue has driven our property taxes among the highest in the US according to the most recent data from The Tax Foundation. In their latest survey of the five-year average property taxes in over 2,700 counties in the US, The Tax Foundation reports that homeowners in Anchorage pay more of their income in property taxes than homeowners in 90% of the counties across the US.

A Tale of Two Cities

The tax burden on homeowners in another high cost-of-living west coast tourist destination is much different from ours. In Honolulu, the owner of a median priced home pays over $2,000/year less in property taxes than the median homeowner in Anchorage. How does this happen? It’s because Honolulu’s visitors pick up a large part of the cost of government. The Tax Foundation reported that the percentage of Honolulu homeowner income that goes to property taxes is lower than that of 1,744 counties out of the 2,773 counties they surveyed between 2006 and 2010. While Anchorage homeowners are in the 90th percentile of highest property taxes in the US, our neighbors to the south are in the 37th percentile.

Hey,Won’t I Just Get Taxed Twice with a Sales Tax?

No. The way the Municipal Tax Cap is structured, local government cannot collect more taxes than allowed by the cap. This would mean property taxes would be reduced dollar-for-dollar for all revenue collected from sales taxes during years that the tax cap is reached .

Aren’t Sales Taxes Unfair to the Poor?

Non- home owning poor folks already pay a substantial burden in the property taxes passed-on from their landlords in higher rents. Housing for the poor would be significantly more affordable when many of these costs are being paid by summer guests and commuters. Sales tax exclusions for items such as most groceries or medications would go a long way to mitigate impact on poor families as well. For the fixed-income elderly poor who are homeowners, lower property taxes could well be the difference in being able to stay in the familiar surroundings of their family homes or moving Outside.

Why Worry– Isn’t Our Overall Tax Burden Really Low?

Some would argue that high property taxes are okay, since we don’t pay state sales or state income taxes. It’s true that state revenue is high enough (over $15,000/person just from oil income) that we receive a PFD check and we don’t need state sales or income taxes. But those are state revenues– paid by someone else. To argue that our high oil revenue is a good reason for high property taxes is like saying, “I should pay double for gas, since my rich uncle gave me a free car”.

State law allows local governments to collect up to 7.5% in local sales taxes. Over 100 Alaskan cities, towns and villages currently collect sales taxes. It’s time we leveraged the popularity of Anchorage as a tourist destination and a center of commerce to get others who use our infrastructure and city services to help reduce our exceptionally high property taxes.

This chart, from the Tax Foundation, shows the contrasts in property taxes between Anchorage and Honolulu: