Senate Passes Bill Encouraging Small and Medium Business Growth
Senate Bill 7 updates outdated corporate tax code
JUNEAU-Today, the Alaska State Senate 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. 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.
“This bill will help Alaska’s businesses keep more of their earnings so they can grow into bigger enterprises, which is great for all Alaskans,” said Senator Giessel. “I would like to thank my colleagues in the Senate for supporting this much needed legislation.”
Senator Giessel and her staff worked with the Department of Revenue to explore ways to address 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 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. For the lowest tax bracket, businesses that take in less than $25,000 a year, the tax rate will be set to zero.
“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 and a company with a taxable income of $550,000 will see about a 6% cut.”
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, the Fairbanks Chamber of Commerce, and NANA Development Corporation.
Senate Bill 7 will now head to the House for further consideration.
For more information, please call Margaret Dowling in Senator Giessel’s office at 907-465-4843.