An Act relating to the taxation of income, permitting the legislature to use certain income tax proceeds to make appropriations for public schools, and providing a credit against the tax for certain property taxes.

Updated: March 16, 1999

For several years, we have been hearing testimony from the public regarding an inequity that exists in Alaska. People who own property in an organized borough pay property taxes, a portion of which funds education. Other Alaskans do not contribute to education, yet they receive the same benefits as those who pay. This bill is intended to remove that inequity. By allowing a credit ONLY for those who do pay property tax, it levels the playing field.

The tax will be levied only against income earned within the state of Alaska, based on W-2 wages, and federal schedules C, E, and F - business income, rentals, royalties, partnerships, S corporations, trusts, and farming. The tax will NOT be levied on retirement pay, interest, dividends, capital gains, or other miscellaneous income.

(See Federal Tax Return 1040. ONLY lines 7, 12, 17, and 18 are taxed.)

The one-half of one percent tax called for in this bill should raise about $15-20 million a year, which the legislature can allocate toward education.