Legislature(2001 - 2002)

05/12/2002 09:06 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     HOUSE JOINT RESOLUTION NO. 35 am                                                                                           
     Relating to urging the United States Congress to amend the tax                                                             
     code to permanently repeal the estate tax.                                                                                 
This  was the  first  hearing  for  this resolution  in  the  Senate                                                            
Finance Committee.                                                                                                              
HEATH  HILYARD,   Staff  to  Representative  James  testified   this                                                            
legislation  is   similar  in  "wording  and  intent"   to  HJR  34,                                                            
introduced by Representative  Coghill during the Twenty-First Alaska                                                            
State  Legislature. Mr.  Hilyard  shared that  Representative  James                                                            
chose to revisit  this issued based on the 2001 action  of President                                                            
George W. Bush  signing into law,  a tax relief act that  includes a                                                            
temporary repeal  of the "death tax". Mr. Hilyard  noted that repeal                                                            
expires in September 2010.                                                                                                      
Mr. Hilyard referenced  the sponsor statement [copy  on file], which                                                            
includes  a timeline that  demonstrates a  graduated decline  in tax                                                            
rates and the  increasing exemption  levels as a result of  the 2001                                                            
federal law. He  pointed out Alaska currently has  an estate tax, AS                                                            
43.31, and  that the tax  rates are calculated  as a portion  of the                                                            
federal  tax rate. He  cited the  State's Department  of Revenue  in                                                            
remarking  that regardless  of  whether  the federal  repeal  become                                                            
permanent,  the temporary  repeal  would  eliminate  revenue to  the                                                            
State from this source by FY 06.                                                                                                
Mr. Hilyard  read from a  statement in support  of this legislation                                                             
submitted  by  the  National  Federation  of  Independent   Business                                                            
(NFIB)/Alaska,  "In addition to the  tax itself, thousands  of small                                                            
businesses  are  impacted  each  year  by  expensive  fees  paid  to                                                            
attorneys, accountants,  and life insurers necessary  to prepare for                                                            
eventual death  tax debt." He furthered  that efforts to  repeal the                                                            
estate  tax are  also supported  by the  National  Black Chamber  of                                                            
Commerce,  the National Association  of Women  Business Owners,  and                                                            
the National Congress of the American Indians, among others.                                                                    
Mr. Hilyard  remarked that  the death tax  affects disproportionate                                                             
demographic  groups and "does not  justify its own existence  from a                                                            
fiscal  perspective"  because collection  expenses  are higher  than                                                            
revenue generated.                                                                                                              
Mr. Hilyard informed that  Representative James' office has been "in                                                            
regular contact"  with White House  staff regarding the progress  of                                                            
this resolution.  Mr. Hilyard stated  "the President is continually                                                             
seeking the support and  efforts of individual legislators and state                                                            
legislatures  as a whole for his tax  relief efforts," according  to                                                            
the  director  of  the  White  House  Office  of  Intergovernmental                                                             
Mr. Hilyard concluded  with a recent quote from President  Bush, "We                                                            
must  make the  repeal  of this  death tax  permanent.  I call  upon                                                            
Congress to do this immediately."                                                                                               
Co-Chair Donley  noted the fiscal note states this  resolution would                                                            
have no impact on spending  and asked why it does not reflect a loss                                                            
of revenue.                                                                                                                     
Mr. Hilyard responded that  the federal law went into effect in 2001                                                            
and  that  the  revenue  decline  would  be  realized  in  2002.  He                                                            
emphasized  that  regardless  of the  passage  of  this resolution;                                                             
revenue from an  estate tax would be eliminated under  current State                                                            
law,  as  it is  based  on  federal tax  rates.  He  qualified  that                                                            
statutes  could be  amended to  impose fees  independently from  the                                                            
federal  tax rates,  in which  case revenues  could  continue to  be                                                            
Senator  Olson  asked  if  any  party  was  actively  opposing  this                                                            
Mr. Hilyard was unaware  of any opposition and stated he "did a fair                                                            
amount of research" attempting to locate any such parties.                                                                      
Co-Chair  Donley  listed "a  few thousand  economists,  the  AFL-CIO                                                            
labor organization…there's a lot of opposition to it."                                                                          
Senator  Green  "moved  HJR  35 out  of  Committee  with  individual                                                            
recommendations and accompanying zero fiscal note."                                                                             
There was no objection  and HJR 35 am, with zero fiscal note #1 from                                                            
the Legislative Affairs Agency, MOVED from Committee.                                                                           

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