Peninsula Representative Paul Seaton, a Homer Republican, filed a bill Friday to bring back an income tax to Alaska. Representative Bryce Edgmon, a Dillingham Democrat, co-sponsored the bill.
Alaska’s budget is in dire straits. Belt-tightening is happening across the board to compensate for a sharp decline in oil revenue that’s left the state with an immense budget deficit.
Representative Paul Seaton says the hole is so large, cuts just don’t cut it anymore.
“You know, three and a half, four billion dollars of deficit and we know we cannot solve it by just making cuts. [You can] terminate the entire state employee force and we would not get halfway there. So, we need to look at diversifying our revenue sources,” says Seaton.
The state last had an income tax in the 1970s but the growing oil industry and the money it pumped into the economy prompted the state to get rid of it in 1980. Then, the state took a look at reinstating the tax 10 years ago. It was briefly considered and then put to the side. Seaton says his proposal now uses information from that past research.
“I was here during the Murkowski administration in which we looked really carefully and analyzed both a sales tax and an income tax. They both raised about the same amount of money but an income tax was much more efficient to collect; it cost less than half the amount that a sales tax did.”
The income tax he is proposing is based on federal tax rates and brackets. A person would pay to the state of Alaska the equivalent of 15% of their federal tax.
Via alaskapublic.org
image credit APEonline
