Senate Defeats Income Tax
Senate Votes 'No' on State Income Tax; Governor Disappointed with Vote
May 12, 2017
House Bill 115, a priority of the Alaska House Majority and Gov. Bill Walker, would have taken approximately $7 billion from the pockets of Alaskans over the next decade to inflate state reserves.
After the Senate voted down the Education Funding Act also known as the state income tax, Governor Bill Walker released a prepared statement.
Walker stated, “Consultants advising our administration and the legislature have consistently shown that a broad-based tax is necessary for us to close our fiscal gap. They have also advised that every other state in the nation has some form of a broad-based tax to provide a stable revenue source for funding government services."
"We simply cannot continue to fund public safety, education and road maintenance by drawing down on our limited savings. I’m disappointed with the Senate’s vote this afternoon, but we’ll continue working with both bodies to fix Alaska’s fiscal crisis,” stated Governor Walker
“Whatever agreement the Senate and the House come to this session, it will not include an income tax. Period,” said Senate President Pete Kelly, R-Fairbanks. “The Senate will not penalize Alaskans for having a job.”
The Senate Labor and Commerce Committee, chaired by Sen. Mia Costello, R-Anchorage, vetted the House income tax proposal. The negative consequences of taking income out of the economy during a recession were apparent.
“We heard from the bill’s sponsor, the Walker administration and experts on income taxes, and took extensive public testimony from Alaskans,” Sen. Costello said. “People are seriously concerned about the prospect of an income tax during a recession, and today’s vote brought clarity to working Alaskan families and the businesses that employ them that an income tax is off the table.
The Senate Majority says their plan solves Alaska’s fiscal problem – without taxing working Alaskans – through responsible reductions, a spending cap and strategic use of the state’s reserves.
“The Senate passed a bill [SB26] in mid-March that provides a solution to Alaska’s fiscal challenge by capping state spending and using earnings to help pay for government and the dividend, which protects the Permanent Fund for future generations,” said Senate Majority Leader Peter Micciche, R-Soldotna.
SB26 limits government spending and allows a responsible annual draw from the Permanent Fund’s earnings to help pay for a smaller government and maintain a dividend.
Micciche said, “We do not support an income tax because Alaska does not need an income tax. Our Senate plan has been proven to fund Alaska’s government by closing the fiscal gap for many, many years without a burdensome income tax on Alaska’s families. It will protect the wages of working Alaskans”
Alaska House Republican stated in a news release their "no" votes were strengthened today by Senators who also stand against an economically-damaging income tax. HB115 failed to pass the Senate in a 15-4 vote. Last month Alaska House Republican members also voted no when the bill was heard on the House floor.
Quoting the House Republican's news release, "The current recession has already crippled Alaskans' income and the state employment rate. Taking more money out of the economy is a recipe for further disaster especially when there's substantial evidence that the fiscal situation can be solved without new or increased taxes on residents."
The House Republican Caucus is reiterating its focus on fulfilling the constitutional duty to pass a responsible budget, capping government spending and providing an economically viable fiscal solution.
House Republicans are urging the House Majority and governor to move on from this bad policy and look at other options on the table.
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Editing by Mary Kauffman, SitNews
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