Legislature Passes Bill to Boost Small & Medium Businesses
Senate Bill 7 encourages business growth by updating outdated tax code
JUNEAU-Today, the Alaska State Legislature passed Senate Bill 7. Senate Bill 7, sponsored by Senator Cathy Giessel, R-Turnagain Arm/North Kenai, provides tax relief to small and medium size businesses in Alaska.
“This bill will help Alaska’s businesses keep more of their earnings so they can grow – a benefit for all Alaskans.” said Senator Giessel. “I would like to thank my colleagues in the House and Senate for supporting this much needed legislation and in particular Rep. Shelley Hughes who moved the companion bill through the House.”
Addressing the concerns of small business owners in her district, Senator Giessel and her staff worked with the Department of Revenue to explore ways to ease the level of government take from small and medium businesses. During that process, they discovered that the ten tax brackets used in calculating tax on corporate income had not been adjusted since 1981. The most sensible course was to adjust those brackets to account for inflation that has occurred during the past 30 years. Based on the Consumer Price Index, that inflation rate is 2.47%. With this adjustment, taxpayers will retain a commensurate level of earnings as they kept in 1981. The bill also adjusts the tax rate for the lowest bracket so that corporations with taxable income of less than 25,000 will pay no tax and it moves the top tax bracket from $90,000 to $222,000.
“The impact of the bill is that our local restaurants, construction companies, tourism businesses and other retailers will be able to keep more of their profits so that they can grow their enterprises,” said Senator Giessel. “While those with the lowest taxable income will benefit the most, all tax payers will see some positive relief. For example, a company with $45,000 in taxable income will see roughly a 50% reduction, while a company which has a taxable income of $550,000 will see about a 6% cut.”
Senate Bill 7 was amended in House Finance to include a provision that makes certain kinds of film productions ineligible for the Alaska State film tax credit. Now, productions such as infomercials, political advertisements and pornography will not be eligible for the film tax credit.
Representative Shelley Hughes, R-Palmer, was instrumental in the passage of Senate Bill 7. She carried the bill on the House Floor and also sponsored a companion bill, House Bill 68, which was shepherded through the House Labor and Commerce Committee to meet SB7 in House Finance. As Chair of the Economic Development, Trade and Tourism Committee, Rep. Hughes is very interested in supporting economic growth of Alaskan businesses and this bill is an important step. “I am happy that SB7 has passed this legislature with such support of my colleagues. Bringing the corporate tax brackets into the current dollars will put money back in the hands of our businesses to reinvest in their companies and to circulate back through the economy.”
Senate Bill 7 now heads to Governor Parnell for his signature.