Legislature(2001 - 2002)
05/12/2002 09:06 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 Affairs. 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 collected. Senator Olson asked if any party was actively opposing this resolution. 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.