Newest tax plan, HB 115 - you're going to need an accountant - Must Read Alaska
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Tuesday, October 26, 2021
HomePoliticsNewest tax plan, HB 115 — you’re going to need an accountant

Newest tax plan, HB 115 — you’re going to need an accountant

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Gov. Bill Walker and First Lady Donna Walker host an event for the Alaska Historical Society at the Governor’s Mansion last week. His Department of Revenue has worked up a new personal income tax, which has been incorporated into HB 115.

A new state income was plopped on the desks of members of the House Finance Committee last week, and it’s a dizzying restructure of what was being considered just two weeks ago. And completely different from one year ago.

If you use TurboTax to complete your yearly exercise in federal taking, you’ll probably need to hire a CPA to do your state taxes.

The new plan strips out the previous language in House Bill 115, which had proposed a flat-percentage income tax. It replaces it with language from Gov. Bill Walker through his Department of Revenue. Now, the tax proposal looks eerily like tax brackets from the Internal Revenue Service, but with rather leaner deductibles.

The new plan offered by tax promoter Rep. Paul Seaton, House Finance co-chair, is intended to disconnect the governor’s proposed income tax from the federal income tax, if federal taxes are reduced under President Donald Trump.

Judging from the complexity of these Seaton-Walker taxes, the “new, improved” HB 115 is a blueprint that has been on the design table for a while.

Insiders in Juneau say the governor has had an income tax proposal “in his back pocket” to be rolled out at the right time this session. But few thought he would do it surreptitiously through the Democrat House majority’s existing tax bill, rather than running his bill through the Rules Committee, which is the usual way for governor-sponsored legislation.

It’s a stunning (or cynical) reversal for the governor who, in October, 2014, told the Alaska Dispatch News: “I have no intention to implement a statewide tax or paying for state government by reducing Permanent Fund dividend checks.  If we properly develop our natural resources and put in place a sustainable budget that should not be necessary.”

But putting in place a sustainable budget and developing our natural resources has fallen by the wayside. Now it’s all about taxes, as last year’s proposals revealed, which are getting more severe by the day.

And it’s becoming a familiar pattern: The tax hasn’t even passed and already it’s going up.

Unfortunately for Gov. Walker, Alaskans are not on board with an income tax. Not at all. A recent poll by Dittman Research of more than 800 Alaskans found that 58 percent of them oppose a state income tax, as shown by this slide given to Must Read Alaska by the Alaska Chamber of Commerce:

A recent Dittman Research poll shows Alaskans’ attitudes toward sales tax, other taxes, and using some of the Permanent Fund earnings to pay for State programs.

The governor’s newest tax plan leaves no taxable dollar untouched. It levies Alaskans at various rates, depending on their income. It’s also comprehensive, taxing everything from personal income, capital gains, pensions, estates, and different types of corporations. If it’s not nailed down, HB115 taxes it.

Must Read Alaska wrote about the new HB 115 on Friday, and promised readers we’d delve into it deeper. For those interested in learning more, the link to HB 115, with plenty of supporting material under the document tab, is here. And there will be hearings this week, starting today (Monday, March 27) at 1:30 pm. Hearings can be usually viewed on 360north.org

HERE ARE YOUR BRACKETS

If you are a wage earner in Alaska, get ready for steep progressivity. The governor’s income tax would have tax brackets similar to federal income tax brackets – except without the deductions.

The basic brackets for single and married, without children:

It gets more complicated once you have children, especially if they receive a Permanent Fund Dividend. The more you earn, the higher your tax. .

  • If you sell your home, you’d be taxed by the state on any capital gains, (unless you buy a house of greater value).
  • The Pick.Click.Give donation you just made? Not deductible on your state taxes.
  • The mortgage interest you pay every month? No deduction.
  • Do you get a State of Alaska pension (Tier 1-3)? You get a 10 percent cost of living allowance on the one hand, but will pay much more back to the state from the other hand.
  • Do you have income from a trust or estate? All taxable like regular income.
  • Are you on a fixed income? The State of Alaska will “fix” it lower for you.
  • Do you have short-term or long-term income? The State of Alaska would consider both the same as regular income.

Last year, the governor’s tax plan was also far reaching, but quite different from his new proposed brackets, which is going to hit resource workers, doctors, lawyers, electricians, and many fishermen hard. In other words, anyone who has any success, financially. Even a modest amount.

This year’s tax proposal can’t be compared line by line with last year’s, however. Walker’s 2016 income tax plan was 6 percent of what Alaskans pay the IRS. Simple. Straightforward.

An Alaskan who owed $10,000 in federal taxes would have owed the State of Alaska $600, under that plan. Walker also in 2016 proposed tax hikes on alcohol and tobacco, fuel, fishing, mining, energy, and tourists.

This year, Alaskans making over $100,000 a year would have to pay the State $6,000, regardless of what they pay the IRS. In other words, important deductions under the federal code don’t work inside Alaska, as envisioned by the Walker Administration and his allies in the State House.

Rep. Seaton, a state income tax true believer from Homer, has been working with the Department of Revenue. By introducing the governor’s language, he’s making sure that people in his home town, where the median household income is $54,778, will pay at least $1,000 a year to the State. And more, in many many cases.

The Seaton-Walker plan is projected to bring in $657 million. But can it be managed by the Department of Revenue with only 60 Revenue Department workers? That’s the number of new employees the original HB 115 had projected, but this tax plan may require more auditors, due to its complexity. There was no fiscal note attached to the new bill.

Hearings on HB 115 will continue throughout the week. Public testimony on this plan begins Wednesday, and Alaskans with an opinion can head to their nearest Legislative Information Office. The limit on citizen testimony is two minutes.

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Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

Latest comments

  • What a shame you all can’t get your act together and come up with a feasible plan that works for everybody .
    How about a sales tax, at least everyone will contribute to the state of Alaska even when they visit like we do other states .

    • Exactly Darlene! But the Governor who ran as a ” conservative running as an independent” is actually quite liberal in his policies. I heard no talk of a sales tax, he just went straight after a social-engineering income tax to further divide people instead of expecting an equal contribution from all. It’s essentially buying votes from those that won’t really contribute and endermining those that produce and actually pay taxes. That takes no vision at all and it’s right out of the progressive liberal playbook. Instead of doing something fair and efficient, Walker wants to implement a discriminatory tax and increase the size of government to administer the plan. I think I’m a member of a fair-sized crowd of voters that expected much better than the performance we are seeing here. I’m very disappointed with this scenario.

      • Yes you are exactly right. Walker is nothing but a liar, a typical liberal, progressive who is for bigger government, higher taxes. Let everyone remember that it was, is, democrats who are stealing our PFD and implementing high taxes on us all while increasing government spending as usual. I only hope that the people of Alaska will remember all of this when the next election comes around.

      • He ran as a conservative running as a independent ending up as a liberal. He lost the Republican primary then usurped the Democratic primary by bypassing it. Only a pure political animal does that.

      • Impeach the traitor?

  • The law makers talk about cuts still haven’t seen their budget to cut personnel wages on the state employees, so with the taxs dollars were still going to pay them high wages that are way to high, half a million dollars to one employee.

  • This is BS !!! Our Legislators along with Governor Walker need to go !!!

  • This is absurdity and bloated stupid government at its best. Walker you need to go..

  • The Governor allows the Bering Straights School Distric to buy a new King Air Turboprop Aircraft for millions of dollars last fall in the depths of the budget deficit and expects us to pay for it with an income tax! Not the only school district buying airplanes! This is FUBAR!!!

  • Cut the budget, fill the oil pipe. Ditch Walker and the d’rats. We need jobs, we need cheap energy, we don’t need more expenses and govt bloat enriching their cronies.

  • Cut the budget (this means we might have to lay people off… until we can afford them back), fill the oil pipe, don’t mess with our Permanent Fund. Ditch Walker, Seaton, and all the d’rats. We need jobs, cheap energy, and no govt expansion or taxes enriching politicians’ cronies.

  • This is total crap. I in no way can afford to have more of my income be taken for a stupid tax to a stupid bloated government. Take our dividend and tax us??? Are you insane??? I think a lot of people will wind up leaving if they do this. I live paycheck to paycheck. This will ruin me financially.

  • We MUST speak up!!! People, don’t let this bill slide off!!!! This is very unfair!!!

  • This is unreal! This’ll drive so many people out of Alaska. There won’t be anyone left to pay this ridiculous tax!

  • This is terrible. We, the voting public, have been deceived by Gov Walker. Worse than “read my lips no new taxes”

    • Yes you have been deceived, everyone who listened to Walker and believed he would do what he said before he was elected, now you see their true colors. This is what happens when we elect liars and selfish people. The democrats are doing nothing but what they do best, pad their own pockets while refusing to listen to the people. Higher taxes, robbing the PFD, and growing the state government in order to make jobs for their elite friends and family.

  • BS!!

  • How can we start a process to impeach the Governor? This is absurd, just make it tougher for those who hard and have some success, they hit us in the pocket book where it hurts. No sales and income tax is the reason why choose to live in this distant tundra.

  • We need to make sure that everyone pays. So many people don’t pay federal taxes under this new proposal it looks like they would pay a state income tax regardless. They won’t do a sales tax now because they want to increase the fuel tax. Give them a year and that will be back on the table as well. I did not vote Walker but I can tell you this, all Incumbents are out of here.

  • As far as I’m concerned Alaska and Walker can go to hell. And while they are at it may as well mine Pebble CK.

    People want to bitch and cry but they don’t want to stand up for what they claim they believe in. Bunch of entitled cowards

  • The State of Alaska has become accustomed to a certain…affluence. Residents of Alaska had become accustomed to a certain level of services provided by The State at no perceived cost. Well, the belt has tightened for The State, and if Alaskans want the same level of service provided by The State, services that do cost money, the money that pays for them has to come from somewhere.

    This is not a defense of taxes, merely pointing out that services provided by The State, be it State or Federal, cost money, and that money has to come from somewhere. There is no such thing as “free” college, healthcare, road maintenance, everything “provided” by The State must be paid for somehow.

    But damn, this could really hurt.

    • SERVICES…lol. Have you driven between Palmer and the Canadian border? That road is a death wish. But go to a remote native village and each house has at least $177,000 sewer and water system that you and I payed for.

  • So my family will have an extra 500$ a month to pay… that’s insane! I would be ok with a flat tax across the board. Or a sales tax. But this is insane! How can we stop it? Families cannot afford this. We are all already struggling in this economy!

    • Call the Legislative Information Office and ask to vote NO.

  • After being here for 30 years perhaps now is the time to leave. Getting ready to retire and want to stay but want some stability.

  • I think that with the high cost of living in this state
    That if they go after the people who are working then those that can leave will as for my self we will sell our house and take our skill set elsewhere. I have no problem with a sales tax that hits everyone

  • Get State spending reduced and under control then talk StateTax straight percent across the board. The more income the more tax, not by income brackets! Leave our inheritance, capital gains alone and home sales . You’re already cappingthe PFD which I understand was protected from government when set up by Hammond and the people’s part is only 5%. Control the 95% first! Do We the People get to vote on any of this?

  • What part of “put a sales tax in place” do you NOT understand? What part of increasing taxes for the oil companies will be bad for Alaska do you NOT understand? What part of get spending under control do you NOT understand?
    A state sales tax is the right thing to do-FIGURE IT OUT-GET IT DONE!
    Tax the oil companies now, when they’re struggling and you can kiss commitments to increase throughput away, watch your royalties go away or just wait for the right legislature to change it all again. Increase taxes all you want and the ROI will focus on the L48 and elsewhere, remember Venezuela?
    Start cutting, call the oil companies and ask them how they achieved significant reductions in CAPEX. No raises for 2 years, no increase in pay, reduced or no bonus, no travel, reductions in food (hell, we had bologna sandwiches for dinner the other night and I’m not complaining), layoffs, terminations, RIF’s (there were 400 people in my group last year, this year we’re at 60, 78% were Alaskans, most of them have either moved or are moving to the L48). Oil, love em’ or hate em’ they keep this state working, timber, fishing, tourism and mining will not put money into the state coffers like oil-get with em’ and work this out, if you let the mid-80’s return, it’s going to get bad.

  • Call the Legislative Information Office and ask to vote NO.

  • What a shame, how about De-lect him next time. Instead of figuring things out and come up a conservative plan, he screw all the people, sham…,

  • One of the reasons I did not vote for him. He has shown us just what type of person he really is. Americans are sick of this kind of government.

  • Cut the budget first
    We Alaskans MUST elect those that will!

  • Get your act together Juneau. Why not consider a sales tax? Not only would that help out the lower income population (you make less money so you spend less money and pay less tax) but it would also bring in some money from the state wide tourist trade. QUIT BEING LAZY and put your thinking caps on instead of automatically talking income tax !! Signing off : AN ANGRY AND DISGUSTED LIFE LONG ALASKA RESIDENT.

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