By RUSSELL STIGALL
After its companion House bill passed easily through committee Wednesday, Senate Bill 7, Corporate Income Tax, waits in the Senate Finance Committee after a Thursday hearing. The tax restructuring and relief legislation won't be scheduled for a committee vote until at least Friday.
Senate Bill 7 and its companion, House Bill 68, restructure the 10 state tax brackets for type C corporations. If enacted, the legislation is predicted to save small- and medium-sized corporations that do business in Alaska $3.8 million. Of these, 27 oil and gas companies would collect an estimated $150,000 in savings. C corporations are taxed on net income.
The bills expand the current 10 tax brackets for C corporations.
Currently, the highest tax bracket for C corporations, taxed at 9.5 percent, is set at $90,000 in net income. The bill would bump up this top tax bracket to incomes over $222,000. The bottom tax bracket moves up from incomes of less than $10,000 to incomes of less than $25,000.
Under the new system, sponsors estimate that a small business with a net income of $45,000 would pay little more than half the current tax liability of approximately $1,250 annually. A company with $550,000 could knock $6,000 off of its $47,000 tax liability.
Sen. Cathy Giessel, R-Anchorage, sponsored Senate Bill 7. She presented the bill to the Senate Finance Committee Thursday morning. Juneau Sen. Dennis Egan has added his name in support of the bill. The bill has also received written support from the Juneau Chamber of Commerce and the Alaska State Chamber of Commerce.
During the bill's hearing in the Senate Finance Committee, Sen. Donny Olson asked about the effects of reducing the number of tax brackets from 10 to five or fewer. During the House Committee on Labor and Commerce hearing for HB 68 on Wednesday, Rep. Charisse Millett asked if reducing the brackets to three would simplify tax time for businesses. Calling into the hearing from the Anchorage Legislative Information Office, Johanna Bales, deputy director for the Alaska Department of Revenue Tax Division said modern tax automation makes the existing tax structure easy enough.
We're so used to administering this way that it doesn't cause us any concern," Bales said.
However, Bales said the division does not have a preference either way.
"It is up to legislators and voters," Bales said.
SB 7 could come up for a vote in Senate Finance Committee as early as Friday at 9 a.m. in Room 532.
• Contact reporter Russell Stigall at 523-2276 or at email@example.com.