Berkowitz and Benson Announce Part III of Alaskan Ownership Stake - The Business Tax Cut Plan
Berkowitz Seeks to Open Alaska for Business Declares: Alaska Must Repeal and Replace Current High Business Tax Regime
Anchorage, AK - Reminding voters that Alaska has repeatedly been ranked dead last among all 50 states for its negative business environment, Ethan Berkowitz, Democratic candidate for Governor, unveiled Part 3 of his Alaskan Ownership Stake today, called Open for Business.
"Currently Alaska is not telling the market that it is open for business. We need to change that, and that is why today I am announcing this third part of the Alaskan Ownership Stake," Berkowitz said.
"Alaska has consistently ranked at the bottom of all 50 states in business climate and the general economic mood in Alaska is starting to turn sour. CNBC recently again ranked Alaska at the bottom of all 50 states and Forbes echoed that ranking. This issue was raised just this week by the Anchorage Chamber of Commerce. It is a real issue for Alaska and Alaskan families," Berkowitz said today at the unveiling if his plan.
"Based on our current the top marginal tax rate of 9.4%, Alaska has the 5th highest corporate income tax in the country, higher that traditionally high tax states such as California, New York, New Jersey and Connecticut."
There are three main piece of the Open for Business Plan, which would apply to non-oil, non-gas and non-mining companies:
Piece 1 - Tax Simplification for Alaska businesses - The plan will clear out the underlying tax brackets that currently hit Alaska businesses making less than $90,000 per year. The plan would eliminate all brackets below the current 9.4% bracket. This will simplify tax filings and streamline government for 1,035 Alaska businesses that currently pay an average tax bill of just $27 to the state of Alaska.
Exist. AK Corp. Exist. AK Corp. Proposed New AK Corp Proposed New
Inc Tax Bracket Tax Rate Inc Tax Bracket Tax Rate
$0 - $9,999 1% $0 - $9, 0%
$10,000-$19,999 2% $10,000-$19,999 0%
$20,000-$29,999 3% $20,000-$29,999 0%
$30,000-$39,999 4% $30,000-$39,999 0%
$40,000-$49,999 5% $40,000-$49,999 0%
$50,000-$59,999 6% $50,000-$59,999 0%
$60,000-$69,999 7% $60,000-$69,999 0%
$70,000-$79,999 8% $70,000-$79,999 0%
$80,000-$89,999 9% $80,000-$89,999 0%
$90,000 and over 9.4% $90,000 and over 4.9%
Piece 2 - Repeal and Replace - The plan would flip the current tax rate, replacing the 9.4% rate with a new lower flat rate of 4.9%. By clearing out the underlying tax brackets and reducing the top rate from 9.4% down to 4.9% Alaska will go from near the bottom in business attractiveness to having the 8th most attractive corporate tax rate in the country.
Piece 3 - Incentivize companies to invest and grow their operations in Alaska - companies still subject to the state corporate tax would be eligible to claim credits if they grow their presence in the Alaska or otherwise make significant investment in the State. The proposed list of qualified activities to be eligible for a credit are as follows:
• A company has at least 100 FTE positions that are filled by Alaska residents. For existing companies with 100 FTEs, you grow employment by 5% over the previous year;
• A company is at least 10% owned by an Alaska based venture fund, investment fund or some other investment vehicle organized under the laws of the state of Alaska;
• You are an investment fund and you set up your headquarters and your funds are held by a banking institution in Alaska;
• You elect to have all corporate funds and business accounts held and operated by an Alaska bank, even if for payment outside of Alaska;
• Your company's headquarters is established in Alaska and your primary officers live and work full time in Alaska;
• Your corporate R&D offices and functions are based in Alaska;
• Your corporation's business is based on developing renewable energy or designs technologies to harness and commercialize renewable energy.
"We estimate this proposal would cost Alaska approximately $38 million in forgone revenue, but within a $5 billion state budget, that represents less than 1% of the overall state budget," Berkowitz said. "It would simplify tax filings for thousands of Alaska businesses and companies, and it would incentives new investment in Alaska."
Berkowitz stressed the tax changes would not be implemented for oil, gas or mining companies.
"We are putting these ideas in place to diversify our economy so that we are not so reliant on oil, gas and mining investment for future job growth. While those industries are critical to our state's budget sustainability, we cannot continue to look solely to them for job creation. We hope these tax ideas will help Alaska businesses withstand a slowing economy while also kick-starting debates in boardrooms around the country about how to invest in Alaska. We all know it is expensive to operate in Alaska; there is no reason to have anti-competitive taxes heaped on top of those high costs when trying to lure investment to Alaska."
This Part 3 of Berkowitz's Alaskan Ownership Stake follows on the heels of Part 1, Own a Piece of the Pipe and Part 2, Lifetime Licenses for Hunting and Fishing. More information can be found at www.EthanBerkowitz.com. ###
Ethan Berkowitz and Diane Benson
Paid for by: Energize Alaska
PO Box 91365 - Anchorage, Alaska 99509
907-563-8426 / 56Ethan