Legislature(2001 - 2002)
02/06/2001 03:30 PM Senate STA
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ALASKA STATE LEGISLATURE
SENATE STATE AFFAIRS COMMITTEE
February 6, 2001
3:30 p.m.
MEMBERS PRESENT
Senator Gene Therriault, Chair
Senator Randy Phillips, Vice Chair
Senator Bettye Davis
MEMBERS ABSENT
Senator Rick Halford
Senator Drue Pearce
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 9
Relating to the development and deployment of the National Missile
Defense System.
MOVED SJR 9 OUT OF COMMITTEE
SENATE JOINT RESOLUTION NO. 12
Urging the United States Congress to amend the tax code to reduce
the marriage penalty.
MOVED SJR 12 OUT OF COMMITTEE
SENATE BILL NO. 39
"An Act relating to an assistant adjutant general for national
missile defense in the Department of Military and Veterans'
Affairs."
SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
SJR 9 - No previous action recorded
SJR 12 - No previous action recorded
SB 39 - No previous action recorded
WITNESS REGISTER
Senator Loren Leman
State Capitol Building, Room 5
Juneau, AK 99801
POSITION STATEMENT: Sponsor
Mr. Bob Sremak
Sremak-Hightower CPA's
Suite 400 3111 C Street
Anchorage, AK 99513
POSITION STATEMENT: Explained the tax consequences of SJR 12.
Ms. Leanna Dube
Delta Junction, AK 99737
POSITION STATEMENT: Supports SJR 9 and SB 39.
ACTION NARRATIVE
TAPE 01-3, SIDE A
Number 001
CHAIRMAN GENE THERRIAULT called the Senate State Affairs Committee
meeting to order at 3:30 p.m. Senators Phillips, Davis and Chairman
Therriault were present. There were three items on the agenda: SJR
9, SJR 12, and SB 39. The first order of business was SJR 12
Eliminate Marriage Tax Penalty. Senator Leman, sponsor, was invited
forward to explain the resolution.
SJR 12-ELIMINATE MARRIAGE TAX PENALTY
SENATOR LEMAN delivered the following sponsor's statement.
SJR 2 expresses the Legislature's support for reducing the
imbalance in the federal Tax Code that taxes married couples
disproportionately more than unmarried couples earning the same
level of income.
The marriage penalty impacts millions of married couples. According
to the Congressional Budget Office (CBO), under current tax laws
married couples pay an average of $1,480 more in taxes each year
than two unmarried people. Between 66 and 68,000 Alaskans are
affected.
The two primary penalties are the standard deduction and the
graduated rate structure. First, the standard deduction amount for
joint filers is not twice that for those claiming single status.
This means an unmarried couple can deduct more of their income than
a married couple. Second, income rate structures that push
taxpayers into higher brackets are less than twice for joint filers
than for those claiming single status. This means that a married
couple may be forced into a higher tax bracket than an unmarried
couple earning the same combined income.
Congress attempted to deal with the marriage penalty last year when
it passed the "Marriage Tax Relief Reconciliation Act of 2000."
This would have provided tax relief to married couples penalized
under current tax laws, but President Clinton vetoed the measure.
Because President Bush and his Cabinet have expressed strong
support for reducing taxes, Congress should revisit the marriage
penalty.
SENATOR LEMAN said that Mr. Bob Sremak, CPA, was online to answer
any specific questions about the standard and graduated deductions.
CHAIRMAN THERRIAULT asked Mr. Sremak if he had any testimony.
MR. BOB SREMAK said that he had some general comments. He said that
this was a complex issue that is not income specific; both upper
and lower income couples are affected. Any provisions that are
sensitive to earned income or adjusted gross income may be
impacted. An example is earned income credits where the more earned
income credits on a return, the lower the possibility the filer
will qualify for the earned income credit. Other areas such as
phase out for individual retirement accounts, child tax credits and
interest deduction for interest on college education are affected.
It's an inequitable area that must be dealt with.
MR. SREMAK said that anyone with children under age 14 and
receiving a permanent fund check could have part of that taxed at
the parent's rate. As a married couple, roughly $43,000 of taxable
income is the limit for staying in the 15 percent tax bracket.
After that, you move into the 28 percent bracket. It's possible for
children under 14 years old to be in the 28 or 31 percent bracket
for the permanent fund dividend. It's tagged onto what the parents'
incremental rate becomes.
CHAIRMAN THERRIAULT asked if the tax was applied to the entirety of
the permanent fund check because it was unearned income.
MR. SREMAK said no, it's phased in. Basically, any income over
$1,400 would be taxed at the parents' highest rate. Generally, the
first $700 of unearned income for someone under 14 years old isn't
taxed, the next $700 is at 15 percent, and then anything over
$1,400 is taxed at the highest of either the child's or parents
rate.
CHAIRMAN THERRIAULT asked for questions. There were none. He then
asked for a motion.
SENATOR PHILLIPS made a motion to move SJR 12, as written, to the
next committee of referral.
CHAIRMAN THERRIAULT noted that there was a zero fiscal note
attached.
He asked for any opposition. There being none, the bill and fiscal
note were forwarded to the next committee.
Number 453
SJR 9-NATIONAL MISSILE DEFENSE SYSTEM
CHAIRMAN THERRIAULT said SJR 9 was the next order of business. He
asked Senator Leman to give his statement.
SENATOR LEMAN thanked Chairman Therriault for the timely scheduling
of the resolution.
He said that the United States reigns supreme as the last great
superpower, but there is still no ability to protect the nation
from ballistic missile attack. He cited the Department of Defense
(DoD) report titled "Proliferation: Threat and Response" pointing
up the growing threat the U.S. faces from foreign nations
developing missile technology. Former Secretary of Defense William
S. Cohen wrote that at least 25 countries possess or are working on
the capability to inflict nuclear, chemical or biological harm.
They are working on either the weapons or a means of delivering
them.
General Norton Schwartz said much the same thing in his report
delivered to the Joint Armed Services Committee on January 30,
2001. He cited trouble areas in North Korea, Iran and Iraq. In
response to the perceived threats, the U.S. has been developing a
national missile defense system, but it has yet to be built.
Although Alaska has been mentioned as a preferred alternative for
the location of key system components like the radar site and
location of the ground based interceptor sites, there are
unanswered questions such as design type, deployment location and
building timeline.
Number 650
Defense Secretary Donald Rumsfield feels that the 1972 Anti
Ballistic Missile Treaty with the Soviet Union is outdated.
According to this treaty, Alaska is not an eligible site. Current
thinking is that Alaska is the only location that would provide
defense of all 50 states.
During the campaign, President Bush said he supported development
of the National Missile Defense System and Alaska's delegation is
supportive as well. The resolution encourages President Bush to
move development forward as soon as technologically possible.
CHAIRMAN THERRIAULT asked for questions for Senator Leman. Seeing
none, he called on Leanna Dube from Delta Junction to testify via
teleconference.
LEANNA DUBE said she works for the City of Delta Junction and that
the economy of Delta Junction continues to suffer from the
downsizing of Fort Greeley. The national missile deployment
environmental impact statement of 2000 identifies Fort Greeley as
the preferred alternative for placement of the ground based
interceptor and command and control elements. The City of Delta
Junction therefore, supports both SJR 9 and SB 39 as a means of
revitalizing the economy of the area.
CHAIRMAN THERRIAULT asked Ms. Dube to fax a copy of her letter to
him at (907) 465-3884.
He asked for any other questions or anyone else wanting to testify.
There were none.
CHAIRMAN THERRIAULT noted that there was a zero fiscal note
accompanying the resolution. He asked for amendments. There were
none. He asked for the rule of the committee.
SENATOR PHILLIPS made a motion to move SJR 9 and fiscal note to the
next committee of referral.
There were no objections.
SB 39-ASST. ADJUTANT GENERAL FOR MISSILE DEFENSE
CHAIRMAN THERRIAULT announced that Major General Phil Oates was not
available to testify on SB 39 so it would be held over until the
meeting Thursday, February 8, 2001.
The meeting was adjourned at 3:40 p.m.
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