Income tax bill gets a hearing in House

Posted: Sunday, February 29, 2004

An income tax bill debated Friday in the House Ways and Means Committee would put much of the burden on out-of-state residents who come to Alaska to work. It provides a credit for people who pay property taxes in Alaska.

The measure, sponsored by Rep. Carl Moses, D-Unalaska, calls for the tax to be based on a person's federal tax liability. That is, if a person owed the federal government $10,000 in taxes, he'd pay the state 5 percent of $10,000.

The tax would be phased in over three years, rising from 5 percent initially to 15 percent. And there would be a 5 percent higher tax bracket for those whose federal tax liability is more than $20,000.

Once the tax is fully in place, it would raise about $344 million a year, according to the state Department of Revenue, but when property tax credits are applied, the state's take would drop to about $110 million.

Estimates on how much would come from out-of-state residents range from $2.3 million to $30 million.

House lawmakers pointed out flaws in the bill Friday, but didn't rule out making it part of a package of proposals that could fill the state's budget gap.

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