Legislature(2003 - 2004)
03/25/2004 01:50 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 236
An Act imposing a tax on employment; and providing for
an effective date.
Representative Hawker recommended that the bill was ready to
move to the House Rules Committee.
Co-Chair Harris asked the amount of money a person would
have to earn before they were assessed the $100 dollar tax.
Representative Hawker replied $600 dollars. Co-Chair Harris
voiced concern that a person would have to pay $100 dollars
out of $600 dollars earned. He thought that was a
substantial amount for a person to have to pay with such a
small income. He recommended that the earned amount be
raised, having a dramatic effect on someone earning only
$600 dollars.
Representative Hawker advised that at $600 dollars, the tax
would be zero; at $610 dollars, the tax would be $1 dollar.
After that, it would be a 10% incremental increase on the
next $1,000 dollars earned. An aggregate earnings of $1,600
dollars, the tax is zero for the rest of the individual's
earnings. He clarified that in order to pay $100 dollars,
the person would have had to make $1,600 dollars.
Discussion continued between Co-Chair Harris and
Representative Hawker. Co-Chair Harris asked if
Representative Hawker would support raising the amount to
$1000 dollars. Representative Hawker replied that they had
discussed that with the sponsor of the bill and that $600
dollars was agreed upon, and that it is the federal level
for recording of self-employment earnings. He stated it was
not the substantive issue of the bill. Co-Chair Harris
pointed out that the employer would have to deduct the
amount from the person's check.
Co-Chair Harris MOVED to increase the amount from $600 to
$1000 dollars. Co-Chair Williams OBJECTED.
Vice Chair Meyer voiced concern with the amount of overhead
costs needed to generate such a small amount. He questioned
how much the change would impact the total amount generated.
MIKE WILLIAMS, (TESFITIED VIA TELECONFERENCE), TAX DIVISION,
DEPARTMENT OF REVENUE, ANCHORAGE, advised that the revenue
would remain constant whether it comes in at $600 or $1000
dollars because it is a flat tax. The tax would generate
approximately $43 million dollars.
Co-Chair Harris asked at $1000 dollars, would the Tax
Division still need to hire 13 full time and 10 part time
employees to administer the program. Mr. Williams replied
they would. Regardless of the amount, the administrative
structure would remain the same.
Co-Chair Harris maintained his motion on the amendment in
order that low paid workers would be able to keep all their
money.
Representative Croft sympathized with the intent of the
amendment. He pointed out that the amendment would only
help those people earning between $600 and $1000 dollars a
year. He did not think that it would be helping anyone
except unless there income was very low. He stated that he
was most concerned with the person making $12,000 dollars.
Representative Croft elaborated that the effort would not
have much of an effect on the real people who will be hurt
by the bill.
A roll call vote was taken on the motion.
IN FAVOR: Stoltze, Joule, Meyer, Harris
OPPOSED: Chenault, Croft, Foster, Hawker, Moses,
Williams
Representative Fate was not present for the vote
The MOTION FAILED (4-6).
Vice Chair Meyer inquired how the person who has multiple
jobs would be handled. Representative Hawker responded that
the duty to collect is imposed upon the employer until the
employee can demonstrate to that employer that they had the
full amount withheld from their wages for that year. There
could be simultaneous multiple employers or sequential
multiple employers. Complete latitude has been given that
as soon as an employee can demonstrate that they have paid
the $100 dollars, they would have no more withheld. He
added that there is a provision that in any case that an
employee should overpay the $100 dollars, they could apply
for a refund at the end of the year for that overpayment.
Vice Chair Meyer voiced concern with that, pointing out that
many people have multiple jobs throughout the year. There
will be an extra burden placed on the employees to
contribute and for them to keep track of that amount. He
thought that the bill would create extra work, burden and
bureaucracy on the employee.
Co-Chair Williams reminisced that he had worked for three
employers when the last education tax was in place. He
stressed how difficult that had been not receiving the
overpaid amount until the end of the year. If he knew that
if he could track of the amount as proposed in this
legislation, he would have done that.
Vice Chair Meyer worried that many of these workers will not
keep track of the amount they have paid in.
Co-Chair Harris asked if it would take the same number of
employees to implement a full-blown graduated income tax.
Mr. Williams said it would require a larger number of staff
for the income tax, with a full time staff of 80 people.
The amount generated would depend on the particular bill in
place. Under Governor Knowles' version, the amount
generated would have been approximately $350 million
dollars.
Representative Foster commented on the jobs that he had when
he was sixteen years old and the implications of paying that
tax had on him.
Representative Foster MOVED to report CS HB 236 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 236 (FIN) was reported out of Committee with
"individual recommendations" and with a new fiscal note by
the Department of Revenue and indeterminate note #1 by the
Department of Labor & Workforce Development.
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