Rep. Alyse Galvin of Anchorage District 14 is smart enough to know a big income tax will never fly, but she’s hoping that a modest income tax will reopen the door to taxation of Alaskans’ paychecks.
HB 156 is that starter tax to get things going and get the money flowing into state spending accounts. Anyone making over $200,000 a year would pay the state 2% of their income over the $200,000 threshold. Everyone else would pay $20 to the state. She says it will bring in $120-150 million a year in new revenue for state coffers.
The bill will be heard in House Way and Means Committee on Monday evening. It’s one of several bills in the House and Senate that would generate new money for the State of Alaska through income and corporation taxes, or even a statewide sales tax.
The last time Alaska had an income tax was in 1980. There have been many who tried, and all of them said that without an income tax, the State of Alaska would go broke. But even when oil was $9 a barrel, legislators did not bite on the taxation solution. Through the years, the budget has continued to grow, but not quite as fast as Democrats and their no-party allies would like. Alaska is the only state to have repealed an income tax once it was on the books.
Galvin has produced no fiscal note for the bill but past proposals saw the cost of state collection of such a revenue eating up at least half of the revenue.
According to the Tax Foundation, Alaska state revenues were close to $30 billion in FY 2021—about $117,000 per household. The median household income in Alaska is $80,287, according to the Census Bureau, and total personal income in the state was $49.2 billion in FY 2021. While some Alaskan incomes well exceed the median, Alaska’s state government revenues that year were 60.6 percent of state total personal income, the Tax Foundation says.
A starter tax like HB 156 would get a tax back on the books for Alaska and could then be adjusted upward in future years.
In 2017, former Gov. Bill Walker called for an income tax. Walker even called for a special session to consider his tax, but it was a nonstarter and he lost the 2018 election.
