News from the Alaska State Legislature, the Office of Senator Costello
For Immediate Release: April 25, 2017
Senate Committee Evaluates Costs of Standing Up ‘Alaska IRS’
JUNEAU – If the income tax backed by the House Democrat Majority and the Governor becomes law, Alaska would have to hire at least 60 new state employees to stand up its very own ‘Alaska IRS’.
Implementation details for the Department of Revenue to write regulations, collect, audit, and enforce the proposed income tax were among the matters heard today in Juneau, after the income tax bill passed the House and was assigned to the Senate Labor & Commerce Committee.
The tax is expected to collect nearly $700 million from Alaskans’ wages, retirements, trust income and business earnings. About 60 percent to 65 percent of that $700 million will come from households with income under $250,000 per year. The 110-person Tax Division would add at least 60 new positions to administer the tax, with immediate start-up costs estimated at $14 million.
“I am personally opposed to an income tax, and more so after hearing the details surrounding this proposal by the House,” said committee chairwoman Sen. Mia Costello (R-Anchorage). “We shouldn’t be collecting working Alaskans’ wages just so we can increase spending and grow government. I’d rather we diversify our economy by supporting our workers and our private sector, instead of trying to diversify our revenue streams by collecting new taxes.”
The Senate Majority has offered a solution to the state’s fiscal problems that relies on budget reductions, use of Permanent Fund earnings, and other state reserves, and does not require new income taxes as supported by the House Democrat Majority.
“Our economy is already under siege, with a recession pushing unemployment higher and significant job losses in our core sectors,” said Sen. Costello. “The administration acknowledged that adding new taxes will thwart any economic recovery with a ‘drag factor’. I look forward to hearing from national experts tomorrow on more precise consequences to our economy.”
Concerned Alaskans can estimate their Alaska Income Tax bill online at www.alaskasenate.org/tax. The estimator does not take into account capital gains and trusts, which would be taxed as well under the House proposal.
The Senate Labor and Commerce Committee will hear from the public on the prospect of an income tax beginning at 6 pm tonight.
For more information, contact Senate Majority Press Secretary Daniel McDonald at (907) 465-4066.