Legislature(2005 - 2006)SENATE FINANCE 532
04/13/2005 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SJR14 | |
| SB 158 | |
| SB 147 | |
| SB158 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 16 | TELECONFERENCED | |
| + | SJR 14 | TELECONFERENCED | |
| + | SB 158 | TELECONFERENCED | |
| + | SB 147 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 70 | ||
9:07:16 AM SENATE JOINT RESOLUTION NO. 14 Urging the United States Congress to amend the tax code to permanently repeal the federal estate and generation-skipping transfer tax. This was the first hearing for this resolution in the Senate Finance Committee. DEBBIE GRUNDMANN, Staff for Senator Charlie Huggins, read testimony into the record as follows. Before you is Senate Joint Resolution 14 - Urging the United States Congress to amend the tax code to permanently repeal the federal estate and generation-skipping transfer tax. The estate of a deceased individual is required to pay a tax to the federal government commonly known as the death tax. This tax is on assets that have been previously taxed and then requiring the survivors to pay taxes on those assets again through an inheritance tax. In 2005 the top tax is 47% with a 1.5 million dollar exclusion. This is a tax that is 1. Bad on economic growth - disincentive to start small or family owned businesses, build a family farm or ranch with the goal of passing it on to your children. 2. May give little incentive to save and invest 3. This tax hurts families at a very fragile time. In 2001 Congress enacted bipartisan legislation to phase out and eventually repeal the death tax until 2010. Therefore in 2010 the estate tax is repealed; however, it springs back to life in 2011 at its old rate of up to 55 percent and at an exemption level of only $1 million. President Bush has included the permanent repeal of the estate tax in his Fiscal Year 2006 budget proposal. Legislation has also been introduced this year in the US Senate and US House to permanently repeal the estate tax. The US House is scheduled to vote on permanent repeal of the estate tax legislation this week. With passage of this resolution we will offer our support to Congress to act this year ending this tax on work, savings, job creation and the American dream. I encourage your support of this legislation. 9:09:22 AM SENATOR CHARILE HUGGINS remarked this resolution "falls into the 'right thing to do' category." 9:10:14 AM Senator Stedman supported this resolution, although an estate tax should be levied on multi-million dollar estates to "slow down the concentration of wealth". He reminded of the situation of the late 1800s and early 1900s when a few families owned a majority of the wealth in the nation. This was the reason the estate tax was implemented. He supported increasing the limit and abolishing the tax for middle income and higher income Alaskans. He noted the value of farms, fishing permits, boats, small businesses and real estate is significant; however a cap should be imposed and the tax should be implemented for high value estates. Otherwise, the wealth of the nation would again become concentrated. Some extremely wealthy families, including the Bill Gates family, have brought this concern forward. 9:11:51 AM Co-Chair Green asked if the extremely wealthy families support paying an estate tax. 9:11:55 AM Senator Stedman understood those families oppose the permanent exemption of all residents because an estate of hundreds of millions of dollars or billions of dollars transferred from generation to generation is a different issue than the inheritance of a family business or property. It is not good public policy to have a few people in control of the majority of the country's assets. 9:13:00 AM Co-Chair Wilken told of the difficulties in paying taxes on the estates of his late parents. He must carry life insurance to prevent his heirs from having to liquidate his assets to pay estate taxes. He did not oppose estate taxes on significant estates, but opposed the tax on middle class estates. 9:16:10 AM Co-Chair Wilken recalled a similar resolution was before the State Senate a few years prior, which did not pass because the question was raised about the impact of this repeal on the State general fund. No answer was provided at that time. He again posed the question. 9:16:31 AM Ms. Grundmann responded that the permanent repeal of the estate tax would have zero fiscal impact on the State general fund. 9:16:57 AM MIKE WILLIAMS, Auditor, Tax Division, Department of Revenue, testified via teleconference from an offnet location to affirm that the current federal structure provides that there would be no fiscal impact on the state of Alaska. 9:18:13 AM Senator Stedman noted the limited time allowable for heirs to procure the funds necessary to pay the estate tax. Many families are forced to sell off assets to raise money for this tax. 9:19:10 AM Senator Huggins gave an example of the state of Nebraska, where his wife was raised. A number of the small farms in that state have been passed down to family members over many generations. Often in these instances, acreage must be sold off to pay the estate tax and the farm becomes smaller. This is not conducive to successful family farming. 9:20:35 AM Senator Olson understood that taxes have been paid on investments and other earnings. However, he cautioned against allowing "super monopolies" from controlling the nation's wealth. He exampled the Carnegie and Rockefeller families, which controlled the nation's economy until estate taxes were created and other actions were taken. 9:21:43 AM Senator Huggins remarked that those families have many attorneys structuring their assets in such a manner as to avoid estate taxes. The impact on these families is minimal. The average American families however are not protected. 9:23:10 AM Senator Dyson appreciated this resolution. The federal government has enacted anti-trust legislation to prohibit monopolies. He opposed the concept that government should limit a family's ability to become rich. 9:24:11 AM STEVE BOYD, Alaska Chapter of National Electrical Contractors Association, testified that this resolution represents the position the union has held for many years. He told of the hardship of the estate tax on second and third generation-owned businesses. 9:25:21 AM Co-Chair Green pointed out that the US Congress is debating the matter this week. 9:25:35 AM Senator Bunde supported the bill. 9:25:54 AM Co-Chair Wilken offered a motion to report SJR 14 from Committee with individual recommendations and accompanying fiscal note. Without objection SJR 14 MOVED from Committee with zero fiscal note #1 from the Department of Revenue. AT EASE 9:27:03 AM/9:31:48 AM
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