Legislature(2017 - 2018)
2018-01-16 Senate Journal
Full Journal pdf2018-01-16 Senate Journal Page 1742 SB 139 SENATE BILL NO. 139 BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR, entitled: "An Act imposing a tax on net earnings from self- employment and wages; relating to the administration and enforcement of the net earnings from self- employment and wages tax; establishing the Alaska economic recovery tax account; and providing for an effective date." was read the first time and referred to the Labor and Commerce, State Affairs and Finance Committees. The following fiscal information was published today: Fiscal Note No. 1, Department of Administration Fiscal Note No. 2, Department of Revenue Governor's transmittal letter dated January 15: Dear President Kelly: Under the authority of Article III, Section 18, Constitution of the State of Alaska, I am transmitting a bill relating to taxation of wages and net earnings from self-employment in the state. 2018-01-16 Senate Journal Page 1743 This bill would impose a tax on net earnings from self-employment and wages of 1.5 percent for a taxable year. The tax would be capped in a taxable year at the greater of $2,200 as adjusted for inflation, or two times the amount of the permanent fund dividend distributed to eligible recipients in the previous calendar year. This bill provides direction on the type of earnings that qualify as net earnings from a source in the state. Further, wages from a source in the state would include wages that are earned while an individual is physically present in the state. Employers would be required to make and pay to the Department of Revenue withholdings in a manner to approximate the amount of the tax. Through regulation, the Department of Revenue would be authorized to allow withholding to stop when the statutory cap is reached. This protects persons working at multiple jobs, as well as high wage earners. This bill also provides provisions for payment of taxes, determination of a taxable year, refund of overpayments, reporting of payments to self-employed individuals, and other provisions for efficient administration of the tax. The bill would establish an Alaska economic recovery tax account in the general fund so that tax revenues received can be accounted for in the tax receipts account; this is in addition to amounts the legislature may wish to appropriate to the account. The bill provides that the legislature may appropriate to capital projects from the economic recovery tax account; the tax account is not a dedicated fund, but a way to better track tax receipts and spending on capital projects. The tax would be in effect from January 1, 2019, to July 1, 2021. This short period would allow time for the state to receive revenues sufficient to meet critical state needs and avoid falling further into debt and facility disrepair. I will continue to work with you to develop a stable fiscal plan to carry us into the future. 2018-01-16 Senate Journal Page 1744 This tax is a simple and efficient measure to address our state's budget shortfall. I urge your prompt and favorable action on this measure. Sincerely, /s/ Bill Walker Governor