Legislation to bring back a state tax on individual Alaskans to help pay for schools — which was abolished in 1980 as the state got rich with oil — looks destined for more homework and returning to class in committee next year.
The bill moved out of the House Ways and Means Committee on May 6, moving next to the Finance Committee. But getting a tax bill through the full House and Senate before the Legislature’s May 19 adjournment deadline would be a tough assignment in any political school.
The measure, as amended by the committee last week, would impose an annual tax of $25 on all Alaskans earning less than $30,000 a year. At between $30,000 and $60,000 in annual income, the tax would be $100. The rate would go to $200 for people earning between $60,000 and $90,000 a year; $400 for incomes over $90,000; and $600 a year for incomes over $120,000.
The tax could raise an estimated $65 million a year, and would be collected through payroll withholding for wage earners, and direct payments from self-employed people. It would apply to residents and non-residents the same.
Although the pre-1980 tax, often called the “school head tax,” was directed toward education funding, the state constitution prohibits dedicated tax funds. The new tax includes intent language that the money may be appropriated to the state’s public education fund.
When she introduced the bill a couple of weeks ago, Anchorage Rep. Ivy Spohnholz, chair of the Ways and Means Committee, referred to the measure as “the first mile of a marathon” for raising revenues to pay for public services.
The state has been living off savings for most of the past 30 years and is struggling to balance the popularity of the annual Permanent Fund dividend with the budget needs of schools, communities and other services.
The education tax was a flat $10 per person when it was abolished in 1980, assessed on every employed person over the age of 19. The levy started at $5 per person when Alaska was a territory in 1919.
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