Representative Paul Seaton, a Republican of Homer, is sponsoring another bill that would create a state income tax but this time with a twist. Seaton is proposing an income tax and a long-term capital gains tax for both residents and non-residents. But, he also wants to turn the Permanent Fund Dividend into a tax credit.
“So it raises about $355 million from both a reduction in Permanent Fund Dividends and it raises about $655 million from the income tax portion,” said Seaton.
Seaton said in a written statement, the tax credit would work similarly to how the PFD works now. The difference is the tax credit would be applied to an Alaskan’s state income tax obligation and then whatever is leftover will be sent to the resident as a refund.
“Then you’re getting both broad base taxes simultaneously moving together and you’re not targeting one group or another group,” said Seaton.
Also like the PFD the tax credit will count as taxable income on an individual’s federal taxes.
Seaton proposed an income tax to the legislature last year. That bill failed.