Click Bishop, a Republican state senator from Fairbanks, has proposed solving the state's education funding problems by creating a new tax that could hit low-wage workers a lot harder than rich earners.
According to the Alaska Dispatch News, Bishop filed Senate Bill 97 to create what he calls an "education tax." Anyone making $10,000 or more annually would be taxed at a rate of $100. The rate goes up to $200 for people who make $50,000 or more annually. And the rate would be capped at $500 for earners who make $500,000 or more annually.
"That means people who earn $10,000 would be forced to pay a tax representing 1 percent of their annual income, while those who make more than $500,000 would pay no more than 0.1 percent," the Alaska Dispatch News noted.
To make matters worse, half of the annual taxes would be withheld from workers' first two paychecks of the year. An employee with an annual salary of $10,000 -- or $386 weekly -- could get hit with a 15 percent cut in take-home pay for the first two weeks of the year.
Due to fluctuating oil prices and decreased oil production, Alaska legislators have been scrambling this session to make up what's expected to be a $4 billion budget deficit.
State Rep. Paul Seaton, who was described as a moderate Republican, has gone as far as to introduce a conventional income tax bill that would set the state rate at 15 percent of the federal income tax rate. Bishop, however, was not willing to support anything more than his education tax, which was expected to raise $40 million to $160 million.
"I’m not an income tax guy. More and more states are moving away from the income tax," Bishop told the News Miner. "We’ve got other things we can do here first and this is about as deep I want to go on a tax right now."
Most of the other Republican lawmakers have said that they preferred to cut the state budget before considering additional taxes. And Democrats have called to explore additional taxes on the oil industry.