JUNEAU — The Alaska House has voted to impose the state’s first income tax in nearly four decades.
The House bill passed in a 22-17 vote on Saturday and now moves to the Senate, which has voiced opposition to the tax proposal. Senate President Pete Kelly released a statement after the House vote calling bill “absurd.”
“As I’ve said many times, the only thing standing between Alaskans and an income tax is the Senate,” said the statement from the Republican lawmaker.
The tax proposal is intended to help close the state’s $2.7 billion budget shortfall. It is expected to generate about $687 million, but the state would not benefit from the revenue until 2020.
Under the income tax plan, a single person making between $14,300 and $50,000 per year will pay 2.5 percent of adjusted gross income to the state. Alaska residents making more will pay a higher rate.
“HB 115 will balance and spread the impact equitably,” said Rep. Paul Seaton, R-Homer. “This will complete the comprehensive, sustainable fiscal plan that so many Alaskans have asked us to do.”
Alaska lawmakers have been working on various proposals to erase the state’s deficit, including cuts to state subsidies for oil and gas drilling and reducing the dividends Alaskans receive from the Permanent Fund.
“A number of my colleagues are not going to support a dividend-only cut,” said Rep. Andy Josephson, D-Anchorage, on the House floor. “They want a balanced plan. A balanced plan. And I can’t blame them.”