Legislature(2005 - 2006)BELTZ 211

03/22/2005 03:30 PM Senate STATE AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SJR 8 CONST. AM: PERMANENT FUND P.O.M.V. TELECONFERENCED
Heard & Held
*+ SJR 14 REPEAL FEDERAL ESTATE TAX TELECONFERENCED
Moved SJR 14 Out of Committee
+ SB 24 REEMPLOYMENT OF RETIREES TELECONFERENCED
Heard & Held
*+ SB 143 STATE INFO SYSTEM PLAN: LEGISLATURE TELECONFERENCED
Heard & Held
+ HB 90 STATE TREASURY WARRANTS TELECONFERENCED
Moved HB 90 Out of Committee
+ HB 97 OATHS; NOTARIES PUBLIC; STATE SEAL TELECONFERENCED
Moved SCS CSHB 97(STA) Out of Committee
Bills Previously Heard/Scheduled
                SJR 14-REPEAL FEDERAL ESTATE TAX                                                                            
                                                                                                                              
CHAIR GENE THERRIAULT  announced SJR 14 to be the  first order of                                                               
business.                                                                                                                       
                                                                                                                                
SENATOR ELTON joined the meeting.                                                                                               
                                                                                                                                
3:41:03 PM                                                                                                                    
                                                                                                                                
DEBORAH  GRUNDMANN,  Staff  to   Senator  Charlie  Huggins,  told                                                               
members  SJR  14  urges  Congress   to  amend  the  tax  code  to                                                               
permanently  repeal the  federal  estate and  generation-skipping                                                               
transfer  tax.  Individuals  accumulate assets  using  after  tax                                                               
income and then  the heirs pay additional tax on  those assets in                                                               
the form of inheritance tax.                                                                                                    
                                                                                                                                
In  2001   Congress  and   President  Bush   enacted  bi-partisan                                                               
legislation to  phase out  and eventually  repeal the  estate tax                                                               
until 2010.  In 2011 the tax  will be reinstated at  its old rate                                                               
of up to 55 percent with an exemption level of $1 million.                                                                      
                                                                                                                                
SJR  14  expresses support  for  the  legislation that  has  been                                                               
introduced in both  bodies of Congress to  permanently repeal the                                                               
estate tax.                                                                                                                     
                                                                                                                                
3:42:36 PM                                                                                                                    
                                                                                                                                
CHAIR  THERRIAULT  asked  Mr.  Williams if  the  state  would  be                                                               
impacted one way or the other.                                                                                                  
                                                                                                                                
MIKE  WILLIAMS, Alaska  Department of  Revenue, participated  via                                                               
teleconference.  He  read  the following  from  the  fiscal  note                                                               
analysis that he had prepared:                                                                                                  
                                                                                                                                
     This  resolution   requests  Congress   to  permanently                                                                    
     repeal  the  federal   estate  and  generation-skipping                                                                    
     transfer  tax. [The]  Alaska state  tax,  AS 43.31,  is                                                                    
     based upon  the state's death tax  credit allowed under                                                                    
     federal  law. In  2001, Congress  changed the  Internal                                                                    
     Revenue Code  to phase out  the state death  tax credit                                                                    
     by  December 31,  2004. Since  Alaska's estate  tax was                                                                    
     effectively reduced  to zero  by the change  in federal                                                                    
     law, permanent  repeal of the  federal estate  tax will                                                                    
     have no fiscal impact to general fund revenue.                                                                             
                                                                                                                                
CHAIR THERRIAULT  asked whether the Murkowski  Administration had                                                               
taken a position on SJR 14.                                                                                                     
                                                                                                                                
MR. WILLIAMS answered he was not aware of an official position.                                                                 
                                                                                                                                
SENATOR ELTON  said given that  state collections  are predicated                                                               
on federal law, why wouldn't a  general fund increment show in FY                                                               
2011 if the federal estate tax disappears in 2010.                                                                              
                                                                                                                                
MR. WILLIAMS clarified  that the estate tax would  spring back to                                                               
life  in calendar  year 2011.  Estate tax  for anyone  who passed                                                               
away in that year wouldn't be  due until 15 months after the date                                                               
of death so  any return to the  State of Alaska would  come in FY                                                               
2012 or later.                                                                                                                  
                                                                                                                                
SENATOR ELTON  asked how  much the state  collected prior  to the                                                               
change in federal law.                                                                                                          
                                                                                                                                
MR.  WILLIAMS estimated  the amount  to average  out at  about $2                                                               
million per year.                                                                                                               
                                                                                                                                
SENATOR ELTON  asked if a  general fund increment of  that amount                                                               
would show after 2012.                                                                                                          
                                                                                                                                
MR. WILLIAMS said that's correct.                                                                                               
                                                                                                                                
CHAIR THERRIAULT remarked  that would be dependent  on whether or                                                               
not Congress permanently repeals the estate tax.                                                                                
                                                                                                                                
He said  estate tax does have  a negative impact and  many people                                                               
devote  considerable  time and  effort  in  estate planning.  Its                                                               
repeal  reduces  the  need  for individuals  to  spend  money  on                                                               
attorneys  and accountants  to reduce  estate  size, which  could                                                               
provide an ongoing savings to constituents.                                                                                     
                                                                                                                                
SENATOR HUGGINS told members that  he believes Representative Don                                                               
Young would be in full support of SJR 14.                                                                                       
                                                                                                                                
3:48:30 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT set SJR 14 aside.                                                                                              
                SJR 14-REPEAL FEDERAL ESTATE TAX                                                                            
                                                                                                                                
4:13:27 PM                                                                                                                    
                                                                                                                                
CHAIR THERRIAULT  returned to SJR  14 and recapped the  issue for                                                               
Senator Wagoner. He  noted there were no questions  and asked for                                                               
a motion.                                                                                                                       
                                                                                                                                
SENATOR  WAGONER  moved SJR  14  from  committee with  individual                                                               
recommendations and accompanying fiscal note.                                                                                   
                                                                                                                                
CHAIR  THERRIAULT announced  that without  objection, the  motion                                                               
carried.                                                                                                                        

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