House approves income tax

A majority of Alaskans remain opposed to an income tax

Juneau delegation members Rep. Justin Parish, D-Juneau, left, and Rep. Sam Kito, D-Juneau, speak together during an at-ease in the House chambers on April 5. (Michael Penn | Juneau Empire)

It was tax day.

 

On April 15, the Alaska House of Representatives voted 22-17 to impose Alaska’s first income tax in 37 years.


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Juneau’s two Representatives, Democrats Sam Kito III and Justin Parish, voted yes.

House Bill 115 heads to a reluctant Senate, and its legislative future is uncertain. Nevertheless, lawmakers on Saturday acknowledged their action was unprecedented in Alaska’s modern history.

Speaker of the House Bryce Edgmon, D-Dillingham, called it “a very extraordinary day in Alaska’s history.”

“I think this is one of the most important votes that I or the other members will ever cast,” said Rep. Jonathan Kreiss-Tomkins, D-Sitka.

Seventeen Democrats, three Republicans and two independents voted yes. Seventeen Republicans voted no, and Rep. Mark Neuman, R-Big Lake was excused absent.

After the vote, Senate President Pete Kelly, R-Fairbanks, released a prepared statement calling the tax “absurd on its face” and added, “As I’ve said many times, the only thing standing between Alaskans and an income tax is the Senate.”

If HB 115 is approved by the Senate and signed by Gov. Bill Walker, single Alaskans making between $14,300 and $50,000 per year will pay 2.5 percent of their adjusted gross income to the state. Alaskans making more money will pay a higher rate.

A single Alaskan making $50,000 per year will pay $992.50. Someone making $100,000 per year will pay $2,992.50.

A couple earning $100,000 per year will pay $1,985. A couple earning $200,000 per year will pay $5,985.

Since 2012, lawmakers have cut more than 44 percent from the state’s overall budget, according to figures from the nonpartisan Legislative Finance Division. Despite those cuts, the state still faces a $2.8 billion annual deficit, brought about by depressed oil prices.

The coalition majority in the House has introduced a four-part plan to erase that deficit by 2020. The parts (or “pillars,” to use the majority’s jargon) include cuts to the operating budget, cuts to state subsidies for oil and gas drilling, spending from the earnings of the Alaska Permanent Fund, and some kind of “broad-based tax,” jargon that this year means an income tax.

The tax is expected to generate only $687 million to pay down the deficit — and that not until fiscal year 2020 — but supporters said it is necessary to balance the burden of fixing the problem.

“HB 115 will balance and spread the impact equitably,” said Rep. Paul Seaton, R-Homer and a coalition member of the Alaska House Finance Committee. “This will complete the comprehensive, sustainable fiscal plan that so many Alaskans have asked us to do.”

Speaking on the floor, Rep. Andy Josephson, D-Anchorage, said passing the tax is necessary to pass other components of the deficit-fighting plan.

“A number of my colleagues are not going to support a dividend-only cut. They want a balanced plan. A balanced plan. And I can’t blame them,” he said.

Rep. Justin Parish, D-Juneau, said no one likes the idea of a tax, but he’s willing to support one to avoid greater budget cuts that will harm Alaskans. One in three Juneau jobs are funded directly by state or local government, according to figures from the Juneau Economic Development Council.

Parish’s voice broke as he spoke about how some students in the Juneau School District don’t get enough to eat.

“At this point, cuts are our most damaging option economically and — oh my goodness, there’s no comparison — morally,” Parish said.

Members of the House Republican Minority constituted all 17 “no” votes Saturday, and most said they had no interest in raising taxes when Alaska is in a recession.

That recession, like the state’s deficit, has been driven by falling oil prices.

“I think ultimately this is going to lead to a smaller economy for the state of Alaska, and I don’t think a smaller economy is good for anybody,” said Rep. Dan Saddler, R-Eagle River.

Rep. David Eastman, R-Wasilla, said he was wearing black in honor of the day.

Rep. Lora Reinbold, R-Eagle River, added that she does not feel that state government has been sufficiently cut.

“We have not cut to the bone. … There is so much to still cut,” she said.

Rep. Lance Pruitt, R-Anchorage, was among those who pointed to the irony of passing the tax bill on federal tax day (the deadline is officially Monday, because tax day falls on a weekend this year).

“I find it also ironic that it’s the same day the Titanic went down,” Pruitt said.

According to a statewide poll conducted by the Alaska Chamber of Commerce at the end of February and start of March, a majority of Alaskans remain opposed to an income tax.

The sole region of the state to support the tax is Southeast Alaska, where the poll found 51 percent of residents support the idea.

Outside the Capitol on Saturday morning, as legislators prepared to vote, a small group of protesters had gathered to request President Donald Trump release copies of his income tax statement.

Among them was Marian Call of Juneau, who said she wished she’d organized a “please tax me” rally instead.

Call pointed out that Alaska’s state government is still majority-funded by oil revenue, and she feels that an income tax would force state government to become more accountable to ordinary Alaskans.

“Whoever pays the bills owns the house, and I want to own the House,” she said as she aimed a thumb at the Capitol.

 


 

• Contact reporter James Brooks at james.k.brooks@juneauempire.com or call 419-7732.

 


 

Topics

Angela Guerrero 3 months ago
The lower threshold excludes seasonal workers who come to work and congest our tourist destinations from paying. Why not lower it to $8,000?
Daniel Donkel 3 months ago

The state of Alaska has so much oil and gas that can solve all Alaska money issues but it is blocked from production by bad laws that are unnecessarily complicated, costly and lengthy, clearly supported by tactics from three sources, ignorant state oil and gas leaders, oligopolies , fossil fuel haters in oil and gas agencies, courts and the legislature!

The Fraser Institute on oil and gas rankings, puts Alaska as one of the worse places in the nation to try to find and sell oil for a profit, why?

How can you fix Alaska's broken oil and gas system? Maybe eat at more fish ( brain food) or pray for more exploration oil and gas companies to drill and find it and produce it, right?

Or, simply make Alaska the most attractive place in the nation to invest, drill and produce oil and gas. To do this simply ask Bill Armstrong, Jim Musselman, Benji Johnson. Bruce Webb, Jeff Hildebrand, Daniel K. Donkel and other longtime Alaska oil and gas investors!.

WILLIAM BURK 3 months ago
Oil and GAs are NOT solution!  Oil os polluting the environment with unnecessary pollution!    Alternative energy is the snswer to a varied investment for the state!  All one has to so is to read the paper about ALL the oil and gas lipe lone breaks!
Mat Baker 3 months ago
How are your solar panels working in Juneau? 
Stephen Conn 3 months ago
yes- a tax on non-residents (I am one and take my untaxed pension to Washington) with necessary offsets for residents. leave the permanent fund alone without a public vote
JAMES COLLMAN 3 months ago
Hey Mr. Burk,  maybe Alaska can start a company like Obama's Solyndra.  Oh wait, that went broke.  How about wind farms? No, those are all taxpayer subsidized and kill birds.  As for the Trump tax return protest how many were out there? 3 or 4?  I bet they don't work and don't know what a tax return is. 
JEFF BARNARD 3 months ago
There is no perfect system. Nobody wants to pay taxes but at least the house is stepping up and showing leadership.  Once upon a time Alaskans actually paid for government and it was fine.  Too bad the senate can't show some of the governor and house's  backbone.  Unfortunately they seem content to hide behind their no taxer constituents.  We've had  way too many special sessions with no results.
KENNETH BURCH 3 months ago
A courageous step.  The first principle of any decent society is that the tax structure should tax those with more at a higher level than those with less.  With a state income tax, Alaska's cities could repeal the sales taxes that affect those with less(the majority) far more than those lucky enough to have ended up rich.

And it's finally time to repeal the oil tax giveaway. 

There's nothing left to cut after all that's been slashed so far.
DAVE HARMAN 3 months ago
See! This is the problem.  The Liberal Left, feel that a progressive tax is a principle of Govt., and that if you are rich you were just lucky. Never mind I worked often up to 100 hours a week. I never bought luxuries and lived within my means for 40 YEARS. Now these people who have no business skills or economic training think I should pay for their sorry lives because I was only lucKy? Look only to the National debt and even to the State of Alaska where these moronic Politicians have sure spent tax payers money real wisely didnt they. Congress should be limited to 30 days unpaid representation of their constituents and go home . Why yesterday a liberal College Professor was advocating an 80% tax on the top 1%. How about you work day and night for 40 or 50 years and get rich then you can give all you want to the Govt.. In fact all of you liberal Dems. Should go ahead and give 50% of your salary, if you draw one to the State. Yeah you do that, all of you first then we will talk.
DAVE HARMAN 3 months ago
No consideration to what this does to trusts,  people who are on pensions from other states, where they have already paid tax on them. Investments from other states such as dividends. The liberal Dems even stating they need money for the Bush where there are less jobs. While you are working you butt off what are the rural doing, sitting on theirs. If the Senate falls for this garbage your PFD is gone. They will cut it back to 1250 and charge you on income tax and take it right back. By their own admission the income tax will not even put a dint in the the debt. Remember the last income tax, it started at 10% a d went to 16 before people were up in arms. The rich will pay nothing. Move to a no income tax state pay Fed Taxes there. They will come  to Alaska to use the resources, make sure through write offs and reinvesting, Draws and gifting they will show no profits. Oh this will be the death of business expantion. You should run, not walk and drag these liberal idiots, who haven't a clue on business out of the house. Working middle class you are getting it rammed right up  your backside. The income tax is a total sham for Liberal Dems to steal your money and spend it better than you.

Judy Brakel 3 months ago
Thank you, House caucus members, for taking this responsible step.  Instead of gutting essential state services, if this passes the Senate we'll start paying for our state government.  Where else in the US have people been getting free state services plus an annual Permanent Fund Dividend? 

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