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HB 250                                                                                                                        
HOUSE BILL NO. 250 by the House Rules Committee by request of                                                                   
the Governor, entitled:                                                                                                         
                                                                                                                                
     "An Act relating to the taxation of income of individuals;                                                                 
     repealing tax credits applied against the tax on individuals under                                                         
     the Alaska Net Income Tax Act; and providing for an effective                                                              
     date."                                                                                                                     
                                                                                                                                
was read the first time and referred to the Finance Committee.                                                                  
                                                                                                                                
The following fiscal note(s) apply:                                                                                             
                                                                                                                                
1.  Fiscal, Dept. of Revenue                                                                                                    
                                                                                                                                
The Governor's transmittal letter dated January 15, 2016, follows:                                                              
                                                                                                                                
"Dear Speaker Chenault:                                                                                                         
                                                                                                                                
Under the authority of Article III, Section 18 of the Alaska                                                                    
Constitution, I am transmitting a bill relating to personal income                                                              
taxation.                                                                                                                       
                                                                                                                                
The bill would establish a personal income tax equal to six percent of                                                          
a taxpayers total federal tax liability for Alaska residents and                                                                
nonresidents with income from a source in the state. Because the tax                                                            
that would be established by the bill is calculated based on federal tax                                                        
liability and not on income, the bill effectively incorporates federal                                                          
brackets and exemptions and so permits this bill, and the Alaska                                                                

2016-01-19                     House Journal                      Page 1443
personal income tax system it would create, to be as simple and                                                                 
transparent as possible and minimizes administrative burdens both for                                                           
the state and for taxpayers. The bill would apply to income earned on                                                           
or after January 1, 2017. In addition, the bill would repeal a set of                                                           
orphaned individual tax credits from the former income tax.                                                                     
                                                                                                                                
                                                                                                                                
The relatively modest tax is expected to raise approximately                                                                    
$200,000,000 annually. For those who itemize federal tax deductions,                                                            
the tax would be deductible from federal income tax. The deduction                                                              
from federal taxes would offset the actual burden of this tax to Alaska                                                         
taxpayers by 20 - 25 percent.                                                                                                   
                                                                                                                                
The bill is an integral component of the New Sustainable Alaska Plan                                                            
to provide a balanced and sustainable budget for Alaska's long-term                                                             
fiscal stability.                                                                                                               
                                                                                                                                
I urge your prompt and favorable action on this measure.                                                                        
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Bill Walker                                                                                                                     
Governor"