• Forecast
  • News Tip
  • Categories
Temperature Precipitation
Estimated read time
3m 34s

Alaska House passes first income tax since 1980

By Liz Raines 4:51 PM April 15, 2017

The Alaska House of Representatives passed a statewide personal income tax Saturday. It’s the first of its kind since legislators abolished the broad-based tax in 1980, after state coffers filled with billions of new dollars from the Trans-Alaska Pipeline.

House Bill 115 creates an income tax based on federal adjusted gross income that includes a per-person exemption of $4,000, including dependents. That deduction is reduced proportionally for out-of-state residents earning income elsewhere.

Permanent Fund Dividend checks are also excluded from taxation, and Alaskans can use their PFDs to offset tax liability. Taxation starts after the first $10,300 of an individual’s income. So, a couple filing jointly with two children wouldn’t be taxed for the first $41,600 of their income — according to a calculation provided by Rep. Les Gara, D-Anchorage.

Rep. Paul Seaton, R-Homer, the co-chair of the Finance Committee, estimates the measure will bring in $687 million annually once fully implemented in 2019. Seaton says the proposed tax is the fourth lowest in the nation. Revenues from the measure are directed to education.

The Democrat-led House majority has called for a broad-based tax as part of a four-pillar plan to solve the state’s nearly $3 billion budget gap. Other pillars include cuts to the state budget, use of the permanent fund’s earnings and an overhaul of the state’s oil tax system.

The House has now passed all pieces of its fiscal plan, but the components face steep opposition in the Senate. The Republican majority has vowed not to pass an income tax or a tax hike on the oil industry.

The Senate took the lead on approving use of the Permanent Fund’s earnings as part of long-term budget plan through passage of Senate Bill 26 last month. But leadership has said it doesn’t make sense to tax Alaskans while still paying out an annual PFD check. It has also expressed concerns that the state’s oil tax policy could have adverse effects on oil production in the state.

Republicans in the House also opposed the measure Saturday, offering several amendments before voting against the measure, all of which failed.

Rep. David Eastman, R-Wasilla, proposed a provision that would repeal the tax in the year 2023. Rep. Lance Pruitt, R-Anchorage, suggested Alaskans should be allowed to donate their PFD checks to the state budget using the Pick.Click.Give. program.

Many members said they were concerned about the negative impact of an income tax on Alaska’s economy, in a time of recession.

House Leadership said the goal of the tax is to reduce the state’s dependence on oil, a volatile revenue stream.

HB 115 passed 22 to 17, along caucus lines.

In a statement Saturday, Gov. Bill Walker applauded passage of the measure:

“We have seen far too many businesses close in recent years due to the uncertainty in Alaska’s economy. We must pass a complete fiscal plan this year and stop the draw on our precious savings. This includes continued cuts to the budget, a restructure of our Permanent Fund Earnings Reserve, and new revenue. My administration will continue to work with the legislature to pass a complete plan this session so we can move on to building Alaska’s future.”

Last year, Walker introduced a more modest income tax proposal that failed to gain traction with lawmakers.

House Minority Leader Rep. Charisse Millett, R-Anchorage, asked for reconsideration of the vote. Members may take up the measure again before sending it to the Senate.

Senate President Pete Kelly, R-Fairbanks, released a statement Saturday in which he stated that the income tax proposal would get a fair hearing, but underscored the Senate’s opposition to the measure.

“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.”

KTVA 11’s Liz Raines can be reached via email or on Facebook and Twitter.

Latest Stories

  • Politics

    Trump administration to issue new Syria sanctions

    by Associated Press on Apr 24, 7:20

    WASHINGTON (AP) – U.S. officials say the Trump administration will issue new sanctions against Syria as early as Monday as part of its ongoing crackdown on the Syrian government and those who support it. Two officials say that the sanctions are part of a broader effort to cut off funding and other support to Syria’s […]

  • Lifestyle

    At least global warming may get Americans off the couch more

    by Associated Press on Apr 24, 7:09

    WASHINGTON (AP) – A new study says global warming’s milder winters will likely nudge Americans off the couch more in the future, a rare, small benefit of climate change. With less chilly winters, the study forecasts that Americans will be more likely to get outdoors, increasing their physical activity by as much as 2.5 percent […]

  • Lifestyle

    Astronaut breaks record for most time in space by American

    by Associated Press on Apr 24, 6:04

    CAPE CANAVERAL, Fla. (AP) – Astronaut Peggy Whitson has another record under her space belt. Early Monday, the International Space Station commander surpassed the record of 534 days, two hours and 48 minutes for most accumulated time in orbit by an American. That record was set last year by Jeffrey Williams. Whitson already was the […]

  • News

    Fairbanks recycling center project $150,000 over budget

    by Associated Press on Apr 24, 5:57

    FAIRBANKS, Alaska (AP) – The Fairbanks North Star Borough is seeking out additional funding to start up a recycling program, as the project is facing a $150,000 cost overrun. The Fairbanks Daily News-Miner reports the borough is looking to open a community recycling center at a warehouse in Fairbanks by July 1, when the Fairbanks […]

  • News

    Kodiak Borough legalizes commercial pot; city ban remains

    by Associated Press on Apr 24, 5:53

    KODIAK, Alaska (AP) – The Kodiak Borough Assembly has voted to lift its commercial marijuana ban, although it is still illegal in the city’s jurisdiction. The Kodiak Daily Mirror reports the assembly voted Thursday 4-2 in favor of lifting the ban. It is unclear how soon people who have applied for state licenses will be […]

  • Bloomberg to world leaders: Ignore Trump on climate

    by Associated Press on Apr 23, 17:36

    NEW YORK (AP) – New York billionaire Michael Bloomberg says he wants to help save an international agreement to reduce carbon emissions. The former New York City mayor addressed his intensifying focus on climate change an interview with The Associated Press. Last week, he released a new book, “Climate of Hope: How Cities, Businesses, and […]

  • Sports

    BLM seeks public input on proposed Red Devil Mine cleanup

    by KTVA Web Staff on Apr 23, 17:17

    The Red Devil Mine is located on the Kuskokwim near the Red Devil Creek between Crooked Creek and Sleetmute. It started mining in the ’30s, picked up steam in the ’50s and ’60s but has not operated since the 1970s. The problem is that there’s mercury, arsenic and antimony in the soils left behind by […]

  • Students sue Trump administration over climate change

    by CBS News on Apr 23, 17:07

    EUGENE, Ore. — Avery McRae has been passionate about the environment for half a lifetime, and she’s been worried about climate change since kindergarten. Now, at 11, she is really getting serious. She recently signed on to sue President Trump and the U.S. government. “Trump is not doing anything to help stop climate change,” she […]