JUNEAU – Today, Senator Tom Begich (D-Anchorage) introduced legislation to establish a flat five percent income tax based on your federal tax rate. Senate Bill 100 would generate new state revenue from residents and non-residents earning an income in Alaska. Currently, nine other states have a flat broad-based income tax ranging from three to 5.25 percent.
An Income Tax Seeks to be Part of a Balanced Solution to Alaska’s Budget Deficit
“The road Alaska is on has finally arrived at the edge of the fiscal cliff. Alaskans realize we need a balanced fiscal plan – a plan that relies on a balance of revenue sources and other solutions, not just on one or two major sources like oil and the Permanent Fund,” said Sen. Begich. “We need a plan where we all play a part – where Alaskans and those who make their profit or their living here invest directly in the services we all use. That commitment will, in turn, increase taxpayer scrutiny of the budgets we produce.”
Alaska’s budget has seen a decrease of nearly $4 billion, or 38.4 percent, over the past seven years. Since 2014, the legislature spent $18.8 billion from savings, leaving the bare minimum of $550 million in the Constitutional Budget Reserve and completely depleting the Statutory Budget Reserve. The Governor recently proposed $1.2 billion of new revenue starting in 2023 but hasn’t identified how the new revenue is generated.
“I am not sure how the Governor intends to generate $1.2 billion without a plan on the table – I haven’t seen his proposals. But I know that Senate Bill 100 will kickstart that discussion on how we generate the new revenue his budget team cites,” concluded Sen. Begich.
The non-partisan Legislative Finance Division estimates this proposal to potentially generate $1.4 billion of new revenue for the State of Alaska, starting in 2023.
Senate Bill 100 is referred to the Senate State Affairs Committee and the Senate Finance Committee.