Committee Passes Bill to Boost Small & Medium Businesses
Senate Bill 7 provides encourages business growth by updating outdated tax code
JUNEAU-On Friday, the Senate Finance Committee moved Senate Bill 7 out of committee. Senate Bill 7, sponsored by Senator Cathy Giessel, R-Turnagain Arm/North Kenai, provides tax relief to small and medium size businesses in Alaska. Senator Giessel started work on the bill last year after several business owners throughout her district approached her about the burden imposed by Alaska’s current corporate income tax structure.
“When these business owners came to me, it was clear we needed to find some way for them to retain more of their earnings so their businesses could grow,” said Senator Giessel.
Senator Giessel and her staff worked with the Department of Revenue to explore ways to address this concern. 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 and reasonable 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%. The proposed new brackets reflect that adjustment for inflation and the new top bracket is moved from $90,000 to $222,000.
“While the tax rates remain the same, the impact of the bill is that your 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. “For example, with the changes I’m proposing in SB 7, a company with $45,000 in taxable income will see a 50% reduction, which adds up to about $600. A company which has a taxable income of $550,000 will see about a 6% cut, adding up roughly to a $6,000 tax break.”
Senate Bill 7 has a very broad base of support. Over the past few weeks, letters of support poured in from around the state including from the Alaska State Chamber of Commerce, the Juneau Chamber of Commerce, the Seward Chamber of Commerce Conference and Visitors Bureau, the Chugiak-Eagle River Chamber of Commerce, and the Fairbanks Chamber of Commerce.
Senate Bill 7 will now head to the full Senate for a vote. A companion bill in the House is also making smooth progress after passing the House Labor and Commerce Committee earlier this week.
For more information, please call Margaret Dowling in Senator Giessel’s office at 907-465-4843.