House Votes to Impose Income Tax on Alaskans
April 16, 2017
Saturday, Alaska House Republicans stood resolutely against a state income tax, while the House Democrat-led Majority voted to take over $680 million from Alaskans by passing House Bill 115.
HB 115, which the House Republicans say should more aptly be called the "Tax Working Alaskans Act," would tax Alaskans' income, including pensions of elder Alaskans, ANCSA Corporation shareholder dividends, and trusts. Sixty new state employees, at an estimated annual cost of over $7.5 million, would need to be hired to impose this tax.
"Taxing Alaskans is fundamentally the wrong thing to do during an economic recession," said Representative Lance Pruitt (R-Anchorage). "Over 9,000 Alaskans have lost their jobs in the last year. We've heard from economists that another 7,500 jobs will be lost in 2017. The House Majority's income tax will make these numbers worse, and make it harder for Alaskans already struggling to make a living."
"This bill has changed every other week and has no modelling," said Representative Mike Chenault (R-Nikiski). "Do we want to be more like the federal government, where we have to pass a bill to find out what is in it? An income tax is not needed to close our fiscal gap, and is not wanted by Alaskans."
A March 2017 poll commissioned by the Alaska Chamber of Commerce demonstrated that 58 percent of Alaskans oppose imposing an income tax to fill the state's budget deficit. As it currently stands, HB 115 will tag Alaska with the unfortunate title of having the 12th highest marginal tax rates in the United States. No modelling was performed on the version of HB 115 voted on Saturday. It is unknown how this income tax would impact economic growth, job creation, business investment, unemployment, Alaska or its residents.
"There are at least four plans out there that address our fiscal gap without taxing Alaskans," said Representative Charisse Millett (R-Anchorage). "Why in the world would we tax Alaskans if we don't have to?"
"Taxing Alaskans who work to give free state services to those who don't [work] is simply the wrong policy," said Representative Dan Saddler (R-Eagle River). "The better policy is to shrink government, cap spending, and encourage the private sector to build new wealth."
Fiscal plans introduced by Alaska House Republicans, which included no state income taxes, have not received any hearings to date, and Republican House Finance members were denied the opportunity to reduce the impacts of this bill on Alaskans.
Senate President Pete Kelly (R-Fairbanks) released the following statement after the passage of a state income tax by the House Democrats. Kelly said, “The House is a co-equal chamber of the legislative branch, therefore, we plan to give the income tax proposal a fair hearing. That being said, reaching into the pockets of working Alaskans – when the state is in the grips of a recession – is absurd on its face. The state lost 9,000 jobs last year, and is expected to lose thousands more this year. This is the worst possible time to penalize people for having a job."
Kelly said, “The Senate Majority’s solution solves the state’s fiscal problem without taxes, which begs the question: why would we impose an income tax on working Alaskans when we don’t need to? As I’ve said many times, the only thing standing between Alaskans and an income tax is the Senate.”
The Alaska House Majority Coalition mentioned nothing in their news spin about their vote Saturday to impose an income tax on working Alaskans. They did address in a news release the pieces of the fiscal plan passed that they say reduces spending by $82 million, structured use of the earnings of the Alaska Permanent Fund, oil tax credit and subsidy reform, and a school tax.
Governor Walker introduced his FY 2018 budget in December, and stressed the need to establish a complete fiscal plan through continued cuts, restructure of the Permanent Fund Earnings Reserve, and the establishment of a broad-based tax. Quoting a news release from the Governor, this bill would fulfill the need for a broad-based tax, and provide a steady source of funding for essential services like public education and state troopers.
Speaker of the House Rep. Bryce Edgmon (D-Dillingham) stated in a news release, "By passing all the components of a comprehensive fiscal plan, we have kept our word to put the future of Alaska first.”
House Finance Committee Co-chair Rep. Paul Seaton (R-Homer) said, "We must put in place a fiscal plan that uses more than just one revenue source. Combining the appropriate use of Permanent Fund earnings with this modest school tax spreads the burden equally across the state."
House Bill 115: INCOME TAX; PFD CREDIT; PERM FUND INCOME passed 22 to 17 and now heads to the Alaska Senate for consideration.
Reporting & Editing by Mary Kauffman, SitNews
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