Senate Bill 7 Corporate Income Tax passed the Senate today with a near unanimous vote. It now heads to the House where its companion awaits hearing in House Finance Committee.
SB7 and House Bill 68 restructure Alaska's corporate income tax code for certain corporations. The only way for small closely-held businesses to incorporate before 1980 was through a type C corporation. The income tax structure for C corporations has not changed in decades.
Bill sponsors Sens. Cathy Giessel R-Turnagain Arm and Dennis Egan D-Juneau and Reps. Shelley Hughes R-Wasilla and Scott Kawasaki D-Fairbanks say it is time to update C corp income tax brackets to bring them in line with 30 years of inflation. The top tax bracket is raised from $90,000 to $222,000. The bottom tax bracket is raised from $10,000 to $25,000. An amendment to SB7 by Sen. Bill Wielechowski D-Anchorage dropped the tax liability for C corps netting $25,000 or less to zero.
Sen. Giessel said several of her constituents who are business owners approached her about the "burden" of Alaska's tax structure.
“The impact of the bill is that your local restaurants, construction companies, tourism businesses and other retailers will be able to keep more of their profits so that they can grow their enterprises,” Giessel said. Proponents give the example of a C corp with net income of $550,000 would pay nearly $6,000 less per year than its current $47,000 tax liability. A C corp that nets $45,000 would see its $1,250 tax liability cut in half.
The bill and its single amendment passed on its third reading with a vote of 18 to one. While in its third reading the bill gained several additional sponsors — Sens. Bill Wielechowski, Hollis French, Fred Dyson, Lesil McGuire, Click Bishop, Anna Fairclough, Kevin Meyer, Peter Micciche, Mike Dunleavy and Pete Kelly.
SB7 now moves to House Rules Committee for committee reference.
• Contact reporter Russell Stigall at 523-2276 or at email@example.com.