Seaton’s income tax proposal gets public testimony today



Rep. Paul Seaton’s plan to levy a state surtax on 15 percent of every Alaskan’s federal tax bill has run into a lot of questions, many of which he has not been able to answer.

More questions may come up today when public testimony is taken on HB 115. The hearing starts at 1:30 pm.

The push-back against HB 115 is just getting started, as Alaskans begin to digest the huge bill’s various and complex sections.

This week commercial fishermen got into the fray, saying they’ll never be able to comply with the withholding requirements for their crews, since they have no way of knowing what other income crew members will make throughout the rest of the year.

Others have questioned the $25 minimum head tax, which would be paid by people who don’t owe the federal government any taxes. With many couples filing jointly, the tax appears to weigh more heavily on single Alaskans than married couples, who would only pay the $25 on the one joint filing. It’s also unclear if children who receive Permanent Fund dividends will be required to pay Seaton’s head tax.

Rep. Paul Seaton

The rather quirky and confusing capital gains surtax section is also drawing fire. One observer noted that if it goes through as written, most senior citizens will exit the state — along with their money. Another legislator has asked how Alaskans will feel about having their home sales taxed by the state — homes that have lost value and are now on the market as people are forced to leave the state because of the recession.

Seaton’s sectional analysis of the bill says it imposes “an income tax and a long-term capital gains tax on residents, as well as nonresidents with income from within the state. The tax is equal to 15% of the taxpayer’s total federal income tax due or $25.00, whatever is greater. Long term capital gains are additionally taxed at the lesser of 10% or the federal tax rate difference between earned income and capital gains. Currently capital gains are taxed by the federal government at a lower rate than earned income.”

Based on this murky language, is appears that Seaton is attempting to raise the capital gains tax rate in Alaska beyond the current federal rate.

Seaton’s entire sectional analysis of his bill is posted here.

Seaton is the co-chair of House Finance.  He bolted the Republican majority last year — along with two other “Republicans” — to side with Democrats and craft an income tax and Permanent Fund restructuring bill.

House Finance will hear from the public on his bill at 1:30 pm today (Friday). Public comments will be limited to two minutes. Those outside of Juneau may head to their local Legislative Information Office (LIO) to call in. For Alaskans who don’t have convenient access to an LIO, they may call 844-586-9085 (toll-free) to get in line to testify.  Callers may start getting in line 30 minutes before the hearing.

Hearings will continue at 1:30 pm on Feb. 21 and 24, but today may be the only opportunity for the public to comment.

The hearing may be broadcast live on and livestreamed here.