Will the House please come back to order in accordance with the provisions of uniform rule 51
I turn the gavel over to the president of the Senate the Honorable Gary Stevens
Thank you, mr. Speaker
We'll join session of The Last State Legislature. Please come to Order Madam Secretary, please call the role of a Senate
Senator
Senator Bjorkman
Senator Klayman, Senator Cronk,
Senator Dunbar,
Senator Giesell,
Senator Gray-Jackson,
Senator Hoffman,
Senator Kaufmann,
Senator Kawasaki,
Senator Keel,
Senator Merrick,
Senator Olsen, Senator Rauscher,
Senator Stedman,
Senator Tilton,
Senator Tobin,
Senator Wilakowski,
Senator Yunt,
President Stevens.
Here, there are 20 senators present.
Thank you, Mr. Speaker.
Will the House members please indicate their presence by voting?
Has any member representative Prox failed to vote representative proxis
We will give him an additional moment
Will the clerk please tally the board 40 members present
Thank You madam secretary, please announce the combined tally there are 60 members president
Thank you with 60 members present this joint session has a quorum to conduct business. The joint section was called under article
two
section 16 of the Alaska State Constitution for the sole purpose of
Considering the governor's veto of Senate bill 113 relating to a person in taxable income and digital business
Not a majority later
Mr. President, Mr.. Speaker, I move that the legislature override the governor's veto of Senate bill 113
Madam Secretary, please read the title
Senate Bill number 113 an act relating to the multi-state tax compact relating
To a portionment of income to this state relating
To highly digitized businesses subject to The Alaska net income tax act and providing for an effective date
Thank you. We are in the discussion.
We're going to be shrugging
Thank You Senate president I rise today just to speak briefly because on this issue
I have received a ton of outreach from my constituents both through email communications and also just in my
Time back home talking with constituents at community council meetings and otherwise
And frankly, there's a lot of interest and also confusion
on this bill and what exactly it does.
When I talk to constituents about this Bill,
I try to keep it at a very high level
because I think there is a lots of details to get into
and I'm sure much of that will come up today.
But again, I wanted to keeping it
at high-level, a simple explanation as to what this
bill does, and the two reasons that I'll be supporting
an override today, so just for a little bit of background,
we have a corporate income tax in Alaska.
Oftentimes don't think that we have many taxes in Alaska, but we do, in fact, have a corporate income tax that
Sea corporations are subject to. The problem is is that our corporate-income tax structure is very out of date.
In fact it was implemented prior to us having internet. I I was just a toddler in-fact
When the internet was coming about and I got to watch as the world really changed. Companies started not just having a physical presence in states
But offering services online
Well, the problem is, is again, our corporate income tax
structure is out of date and looked at those old styles of
business. And we took their corporate
income and we taxed it based on their physical
presence in our state. So how many employees do you have here? What's your physical footprint,
your building square footage that you haven't asked? Other factors like that that really
apply to your physically presence. Well as these digital businesses came about, as the
internet revolution came out, you've companies now like Amazon that offer server hosting
and TV streaming. You have Netflix, so many other companies that offers services online
with very little to no physical foot print in the state and that's a problem because
in Alaska doing sales in alaska doing business here using our infrastructure our assets and not
we're not getting our fair share of that our our fear share the taxes that should be collected
on that income other states tax these services i think the number is 36 maybe of other States
that have implemented a highly digital income tax and that's what this build is again it modernized
digital sales in the state and portion our corporate income tax off of that.
I think this is important for two reasons.
I mean, one, structurally, it just modernizes our statutes to recognize that business has
changed and their footprint or their presence in our state has changed, and how we should
base our taxes that are already on the books has change.
I that's an important reason to support this.
The other reason I think that it's important to support the silver
right is it is a matter of fairness.
The sales that are occurring today in Alaska are already being
taxed in many cases by other states.
So the sales are happening here to Alaskans are being taxed by
other States and their collecting income off of those sales.
Why aren't we getting our fair share of that?
Essentially, we're subsidizing other states by not modernizing our tax structure.
I think that's a problem that Alaska would be subsidising services elsewhere throughout
the country.
And so, again, when I talk to constituents about this, it just seems like a common sense
way to update our statutes, to recognize that business has changed, while also making
sure that we are being fair about receiving our portion of taxes to ought to be collected
on C corporations.
Again, I view this as an update to our tax structure, but look, we've all seen the discussion of fiscal plans over the years.
I think we have seen a heightened presence of the, there's more attention on that issue this year.
I think we've all heard that the governor plans
to implement a number of tax proposals.
Frankly, that will impact Alaskans directly
and tax Alascans, directly.
And this, I view, is an incremental step
towards a fiscal plan that allows us
to capture some income, not from Alaskins,
but from major corporations that exist out of state
that are currently contributing nothing to Alaska
other than the services that they offer.
So just, again, at a high level,
I wanted to make sure my constituents understood
what this issue is and make that I brought
So override to this chamber.
Thank you, Senator President.
Thank You, Representative Schrocky.
Representative Prox.
Thank-you, Mr. President, this bill came to us
kind of late in the first session,
King to the House, late.
It was sometime in April, I forget, but it was late
and I was frankly enthused about it.
I am not a big fan of the internet.
And so my only objection was a tax rate was too low.
But my first objection, and then they figured out
that they don't pay, that's right.
But it's not matter if you're in this,
I just don' mind the Internet.
But I didn't have time to really dig into it.
last year, so I voted no on the bill last
year. And then when the veto message came
out, I looked into it some more and looked
into the documentation.
And there are businesses that are the target
of this tax, and they raise some good points
of, this may not conform to the Interstate
Commerce Act and et cetera.
And as was pointed out in the
veto messages.
It seems to me it's very likely to be challenged in court.
So, I think the best thing for us to do at this time is to vote no on the override that is sustained.
Governor Spino, go back to it, read what those folks have said,
reach out, talk to them, see if we can figure this out and then pass a bill that
That conforms I almost use the word fair, but I don't like using the work fair because it's fair. They can do what they want
I Don't care
But we should reach some sort of an agreement with them so we can avoid these lawsuits that the lawsuits
Just are not good for business. So I think we shouldn't vote no on overriding the veto go back talk to the folks
Work out something that works for everybody and then move forward. Thank you
Representative Prox
Thank you, Mr. President and Mr Speaker.
SB 113 does something very simple.
Right now, businesses in Alaska must,
that are based in Alaskan must pay a corporate income tax.
They are competing with internet based companies
in the lower 48 who do not have to pay that tax,
we are hamstringing, we our handicapping,
our Alaska based brick and mortar businesses
internet-based companies in the lower 48. Why would we continue to force our own local businesses
to pay attacks that were not forcing billion-dollar corporations in The Lower 48 to Pay? It is simply
not fair. We need to incentivize business here in Alaska, not disincentivize it by allowing our
tax structure to continue. This is a simple change that would tax businesses based on where
their sales happen, not based where their business actually is.
This it's not fair for somebody when you go and buy your product at a local business that
that person has to pay a tax and when buy it online, the tax doesn't have to be paid.
It's gone on for too long, we must stop it.
We must incentivize business in Alaska.
Please vote to override the governor's veto.
Thank you, Representative Gray.
Representative Stapp.
Thank You, Mr. President,
Mr Speaker.
Good to see you in here as always,
Mr President.
I'm going to rise in opposition, and I will make this very simple, Mr. President.
If you know the answers to the questions, I am going pose to you today.
You should vote yes, but given the fact that no one, not even myself, is going
to know answers for these questions.
I would behoove you to vote no, mr. Speaker, for starters.
I'm going to remind everyone that this bill passed in A version.
What is A-version means?
That means this Bill 1 and 2 through both bodies legislated without any substantive changes.
And there are a lot of questions with the bill that we should probably know the answer to.
Number one, well, when we passed this, Bill, it had a delayed effective date, Mr. President.
It had delayed effect of date.
which means we were going to give the Department of Revenue time to create a regulatory package in order to make sure that businesses,
when they made this transition from cost of performance to market-based sourcing,
there'd be enough time for them to figure out how they were gonna assess first, second, third, fourth, court taxes, okay?
For whatever reason, Mr. Speaker, this bill sat in this body and was not transmission to the governor for months,
This outcome was guaranteed or not, I don't know, but during those months would have been pretty nice for the department to be able to actually craft a regulatory package, which 80% of this bill is required for them to do.
Okay, that didn't happen.
You vote to override this Bill, Mr. Speaker, you're going to create a new type of corporate tax structure for people that there's no regulatory guidance on how to pay.
So, I would argue we probably shouldn't do that.
We should probably give the time for departments to actually create the need of regulatory guidance
in order for them to be able to collect and administer the changes in the tax structure.
Second thing, Mr. Speaker, Ms. President, people will say a lot of things about this bill.
But it's actually quite complex.
Most of the things have been said so far are kind of true, but mostly not true.
And I'll give you an example.
The bill has two apportionment factors.
3-factor apportionment with this property payroll and sales and then establishes a single sales factor just for digitized businesses
Mr. Speaker, that's kind of a weird thing to do. Okay, like I don't know if any other state actually uses two
Apportionate factors
property payroll sales, and they use a signal sales factory for digitalized business is only
But honestly, we should probably just use the single-sales factor rather than using
one type of apportionment method and another type
of proportion method.
I wish I could tell you, Mr. President,
what that would actually do is terms of revenue,
but given the fact that we never looked at any of that,
we don't know.
So because we do not know,
we should probably take the time to look at that.
I think if you look, at most states,
when they change from cost to performance
to market-based sourcing,
they use the single-sales factor
for every type
of corporate tax enforcement.
Maybe we shouldn't.
Maybe it'd be better first, maybe the bill would raise more revenue.
I don't know.
The third thing is Nexus, Mr. Speaker, Ms. President.
What is nexus?
Nexus is basically the terminology that's used when a company establishes the ability to have their profitability net income tax in the state.
You have companies around the country that don t allow employees to do remote work in Alaska.
to have employees do remote work in Alaska
is because if they establish payroll in Alaskan,
they might be subject to our corporate net income tax
because we do use a three-factor apportionment.
All right, so maybe if we use the single sales factor
for every type of business in enforcement
when it comes to corporate and income,
we'd have a bunch of companies that wouldn't be afraid
of establishing Nexus Alaska
because establishing payroll wouldn be the same thing
as having receipts.
Why am I using technical terms, Mr. President?
Well, because the bill is actually very technical.
And if we spent some time through the committee process on it, we would know that.
And fourth, Mr. President, existing apportionment in state administrative code as opposed to state statute.
Believe it or not, there's a lot of special apporsionments of how we treat different type of business
Right. So when I carry this bill on the floor, and by the way, I actually like this
bill a lot. And I, if this veto doesn't get overridden today,
I plan to reintroduce this pill fixing all those things,
or at least attempting to try to figure out all of those
things. But I want to let folks know, like there are special
portionments for airlines, for oil and gas industry,
for other industries that are in administrative codes, some summer in our
statutes and some are not.
And when we looked at this Bill last time, a
lot of these issues came up last minute.
And we should probably move all of those things into our state statute if we're going to be in our
administrative code forever. Like why would we want to do that? Because we don't want
to unintentionally overwrite a type of structure that we decided to put in place years ago for
whatever reason. Or Mr. President, like maybe the things that
we put into administrative codes years or antiquated are not right. We should go fix them.
Because I don't know any of those answers and because I can guarantee you nobody in this room knows any
Of those answer's we should probably sustain the veto
Draft a new bill and find out. Thank you, mr. President. I thank you representative sat
representative Carrick
Thank You mister president mrs. Speaker good morning
I want us to take a step back and look at the big picture, and Mr. Speaker, Mr President,
ask this question fundamentally of who pays.
Under this legislation, SB113, that was passed on a very large bipartisan basis, we've captured
existing revenue from digital businesses in Alaska that are operating here that have a
Without this bill, it is Alaskan small businesses who, and the brick and mortar,
mom-and-pop shops, the small business that pay differentially.
Without this bill, we also continue
to underfund implementation of the Alaska Reads Act.
This bill raises approximately $21.9 million
for reading proficiency grants in our state.
It raises a total of about 25 to 65 million a year.
And we all know that 10 million of that revenue
would go towards vocational and technical education training
in public schools in Alaska.
And that also helps support both homeschool
those brick and mortar students in Alaska.
So this is helping all students get a better education
in the subjects that are most important
for Alaska's current and long-term future.
Mr. Speaker and Mr President,
this income builds on the promise that was generated
when these bodies passed the Alaska Reads Act,
the Promise and the Progress that has taken place since then.
Without this bill, who pays?
Without this bill, our small businesses continue to face undue burdens.
And they are asked to contribute disproportionately to our structures.
Those mom and pop shops face those undue burden.
The new entrepreneurs in our state face the burdens without this
bill.
We continue to place undue burdens as well on our school districts and on
our schools. We place undo burdens on
our students and we set them behind. So I ask
folks to continue up hold their votes on SB 113
and vote to override the legislation today.
Thank you, Representative Kerry. Representative Jimmy.
And Mr. President, this tax is not on Alaskans.
Big companies pay, not Alascans, our next six prices are the same.
Same in Napaskyak, Utrejavik Bethel, Anchorage, Ketchikan.
And the Big Apple, New York City, same in Idaho.
They didn't go up there
Nor they're coming up here
Revenue sources will be lost and not gaining for Alaska
And if Netflix prices ever are raised it won't be because of this bill
It's because they know we will still pay to watch heated rivalry
Same on Netflix same on buffering same bill
Thank you, Representative Jimmy.
Representative St. Clair
Thank You, Mr. President
I will be a no to override the governor's veto for several several reasons many of which have been already addressed and
The revenue that was stated, it's supposed to increase $25 to $65 million.
I really haven't seen an actuarial.
And I think the real costs to the state are, and I contacted LA and
I said, how much online business do we do?
How much on-line purchasing do do eight to nine million dollars?
And if you go out of 10%, that's almost $900,000 that the State is going to have to
And those that know me know that I don't like to increase the budget and want to keep it as low as possible.
This also puts a burden on the lower to middle class to say that the vendor will not increase prices is a fallacy.
Maine did it, they adopted similar legislation and they saw a 5.5% increase.
It will get trickled down.
These companies are there to make money.
They're not charity.
So any cost that they incur, even as minimal as it may be,
they're going to pass down to the consumer.
It's trickle-down affected, it's economics.
And as $900,000 or a million, just for LAA,
we'll use $1 million just a reference,
but it is increasing our state's budget.
These departments are going to require they're gonna everyone does everything online because we are geographically separated
Lower middle-income families. There are no exceptions for food medical supplies or education
I've tried reaching out to one of the school districts and asked okay, how much do we spend our books that we order from?
or the increase to the funding required for education.
I heard the reference that other states have not seen some of these impacts.
They were minimal or basically negligible.
But we look at Alaska, everything costs more up here.
I once bought an item for, I think it cost me $8 and it costs me 20 dollars in shipping.
to say that it's not going to increase the cost of items,
I think is misleading.
And I'll just kind of leave that at that.
As my colleague from district 32 stated,
the regulations are not in place.
The foundation is not a place,
it is ready for prime time.
I do believe that we will see components of this bill
come back in different legislation,
and at the time we can address it.
Right now, this is now ready to go.
And it's we don't know how much we're gonna get and the vendors don t know
How much they're going to have to pay we have? To get those regulations in statute first. Thank you
Thank You representative St. Clair representative Galvin
Thank, you mr. President.
Thank. You mister speaker I rise in support of this override and I'd like to bring us back to some
basic information that we have from this, from the 36 other states who have already passed this.
What we know overall is that there will not be a burden to Alaskans for this and
the reason I'm supporting this is we as a body,
two bodies have known for almost a decade now.
that we no longer have the revenue that
we used to have coming into this state in the same way.
We are in a fiscal crunch.
We're about to come to a physical cliff.
So revenue matters to us, and this is one measure
that will not impact our constituents
like other measures will.
That also need to be on the table,
but this one in particular,
the reason I think that it passed so overwhelmingly
last session.
is that it does not have that impact.
We have looked at that.
And with regard to regs,
I will add that is very customary for every state
and certainly Alaska to build reg's once a bill is passed,
particularly a Bill with a whole new structure
that's needed to come.
With regard to our lack of understanding of how much revenue,
that's because we can't get that information from private companies.
That said, we do know with the facts from other states,
we have extrapolated,
we've figured out what we think best guesses are,
we know it could bring us between 25 and 65 million.
Is that worth our going through this struggle right now today?
Yes. Is it perfect? Maybe not.
There will always be questions, of course, when we pass a major bill like this.
And there will likely be follow-up bills to come because we need to, sometimes we learn
more.
without passing this, we will maybe find some things out
that tell us we do need to make additional bills.
But I'm encouraging us to look at this today
because of our fiscal needs.
It's as simple as that.
I think that we need
to be sure that are getting to the revenue as fast as we can.
I do not want us delay that, I feel that Alaskans do
not to delay it, that I am hearing every day.
about our deep needs to ensure that we are doing our constitutional,
we need to implement our Constitutional responsibility,
particularly around education.
And we all know that this particular bill is in alignment with making sure we are doing what we know is needed in education.
Not only the Reads Act, but also I would add our CTE because that brings our students wanting to show up to school.
That hands-on learning is critical.
We know that attendance is critical.
So I'm very excited that this bill will do positive things
for the state of Alaska.
I am grateful to all of those who supported it in the past.
I hope that we continue and grow momentum
and make sure that the bill passes.
So thank you very much.
Thank you, Representative Galvan.
Representative McCabe.
President.
Mr. Speaker, where do I start?
So I'd like to answer a couple questions. The first one from my esteemed colleague at district 35
She asked the question who pays
We pay
Alaskans are going to pay it's disingenuous to think that we are not going pay for this tax one way or the other
so
You can expect that if this goes through and if we do not sustain this veto
That we will see increased prices for our internet buys
It's it gonna happen
What does that mean?
It means that the people in the villages
that do not have necessarily big, huge brick and mortar
or opportunities for brick-and-mortar stores
are going to pay more for ordering from the internet.
It's a fact of life, it's business decision.
We are gonna pay, that's who pays.
Next, I'd like to address the thought of dedicating this
funding that we're going to get to the REEDS Act or to education.
We can't do that.
Constitutionally, we cannot dedicate this money to
the ReEDs Act, so what's going
to happen?
It's gonna come to
the legislature and we are going
to spend it on whatever we want,
because that's what we do.
We don't have a revenue
problem in Alaska.
We, in this body,
not imputing anybody,
because I'm guilty as well.
We have a spending problem.
My esteemed colleague from District 12 was on the fiscal policy working group with myself and we said, yes, we might need more revenue.
But we also need a spend limit.
We also needed to find places in the budget that we can cut.
We must learn to control our spending.
We have to.
Before we do any kind of revenue generation idea,
we have the look at our spend and look
at ourselves.
That's what families do.
When you have a revenue problem,
when you a budget problem in your family,
you cut spending, you got out the fluff,
you get out that the wants, and you focus on the needs.
That's what we need to do before we start taxing anybody, because at the end of the day, a tax is paid by us, by the citizens.
I don't think the tiny amount of revenue we're going to garner from this bill is worth overriding the governor's veto.
Thank you.
Thank you, Mr. President.
I think there's some confusion.
There is a sales tax proposal out there
from the administration, but that's not the bill before us.
This is corporate income tax apportionment.
I did receive two emails from internet trade associations
opposing this bill and I noticed their area codes
are from area code 202 Washington, DC.
The other one was from Seattle.
Meanwhile, I received numerous emails
from Alaskans urging us to vote yes.
both to give fairness in our tax code to brick and small brick
and mortar small businesses owned by people who actually live here and are
invested in community and to fund core services including education. I have to
admire the hutzpah of these outside special interest groups who claim a
tax structure used by 36 other states is somehow unconstitutional. It's a bold
claim.
A ridiculous claim, in fact, since the majority of other states have brought their corporate income tax code into the 21st century.
In the year 2026, I think it's time that we do as well.
Feels, Senator Meyers.
Thank you, Mr. President.
So this bill has been through a bit of an interesting journey so far.
reduce our deficit. The funny thing is that it came over this body and before it could even
pass this party and even make its way to the third floor, we'd already tied it to new spending.
That's not reducing the deficit, Mr. President. And in fact, that makes our situation worse.
It sends the wrong message throughout our state, across the country, to
new companies that are trying to invest in Alaska,
You might be the next target, as we're trying to fix our revenue situation and fix other
problems within our economy.
That's the wrong message for us to be sending, Mr. President.
Now it is true that this measure was presented to the fiscal policy working group a few
years ago by the Revenue Commissioner at the time as part of different potential revenue
But the overall context of that, as was brought up already at least once,
was that it was within the context a full package.
Not just new revenue measures, not just revenue measure that could help us spend more money.
But within a whole package, including a constitutional spending cap,
constitutional changes to the permanent fund and the dividend, and some other pieces as well.
In that context, Mr. President, I could support this bill.
We've heard that it's tie-day education spending, but as has already been mentioned, we can't dedicate funds.
Just as one example,
we had some discussion over the last couple of years about the, if you give me a little bit of latitude, please.
Some discussion in the past couple years, about our vehicle rental tax, and altering that.
Well, according to statute, the vehicle realm tax is supposed to go towards tourism marketing.
Well in the current fiscal year we're projected to bring in about 15 million dollars in
the vehicle rental tax and the budget that we passed last year, none of it went to tourism
marketing.
This bill has been promoted because it does not tax Alaska, at least not directly.
We can talk about the indirect effects that goes back and forth.
that that's a selling point for the bill.
I mean, hey, nobody wants to pay for something, right?
But it seems to me that
that following the pattern that we've had
since, well, the 70s, at least,
of continuing to work to hide
the true cost of government from Alaskans.
Mr. President, if our government's truly worth it,
we wouldn't be afraid to ask people to paid for it.
So that is very concerning to be
that were still trying to height it
Honestly, Mr. President, our large part of our problem with our fiscal situation in this state is that we have separated the people paying for state government from the
people benefiting from state
government. And I can't continue to support that model. Thank you, Ms.
President.
Thank You, Senator Myers. Representative Hannon.
Thank, you. Good morning, Mister President
Nice to see you in the People's House.
I rise in support of a veto override of Senate Bill 113.
And I want to remind Alaskans, corporations are already paying this tax.
They are paying it to the states that are part of the multi-state compact.
Because we are not a part it the tax of sales for
it highly digitized business, let's say your Netflix subscription.
Netflix is headquartered in California.
revenue for that Netflix subscription is paid to California because we're not a party to it.
So 36 states, by joining the multi-state compact, get their share of the corporate income tax
to their state, to those of us who are not party, their home states are getting it,
it doesn't change the burden on the corporation. It is not a tax that would trickle down to
Alaskan consumers because the corporate income tax is already being paid, but it's not being
paid to Alaska. I want the money that is paid for by Alascans to be taxed, benefited to Alaska.
like us not to join the compact.
They have a very large internet headquartered business.
Washington State is happy to accept tax revenue
that should come to Alaska and keep it in their home state.
So Alaska should modernize,
join in the multi-state digitized corporation tax,
and get corporate income tax that is
Generated by Alaskan consumers paid to Alascan revenue.
I urge your support of a veto override of Senate Bill 113.
Well, thank you, Representative Hannon.
Is there further discussion?
President Biden.
Thank you President Stevens.
Appreciate the opportunity to get up and briefly speak about what's before us today.
It's definitely a real challenge, a challenge for many of us in this room
Many of us voted for this bill.
I voted this for bill, I've voted the opportunity to have a level playing field for businesses in the state specifically corporations.
I think that's the right thing to do is to a have level play field.
When I made this vote Mr. President, there was an assumption that we would have time to work with
The package that would be necessary for corporations doing business in the state to understand
the full totality of this bill
unfortunately
We've pat we did our job in a and a bipartisan bicameral way
Working together to create a structure
That I believe would have created fairness maybe not perfect
But fairness in that that these businesses could work in this state of Alaska
to create that level playing field.
We made those votes, we passed this bill,
but the work didn't get done.
The work did not get down to
create the regulatory package to give certainty
to those that are working in this state
to know what they're actually going to be paying taxes on.
That bill was held over
and it was passed over to the administration.
After our last meeting that we would have been able to take this up before and if this would've been taken up
Before when we last met as an opportunity to have this discussion
My my decision on this will be probably very different because I want to make sure that I'm telling my constituents in district one and
Alaska
That we are going to give some level of certainty on how we do business
Biggest problem we face is my colleague from Fairbanks is
I look really indicated is that this is a complicated bill, but there's sections eight and section nine of this bill that I am unable to today with my vote or in this chamber and the chamber across down the hall to amend.
And that's when this would go into effect that that date is already passed, Mr. President.
So we've got a lot of work ahead of us if we want to create this level playing field in the corporate tax structure.
ahead of us that we have another opportunity to do that but the opportunity
to correct this one has passed. So I don't want to be going forward to give
a message to Alaskans and a messaged to those that want
to business here that, we are going to put forward uncertainty and I think
that's what's in front of today.
So, I look forward continuing by partisan work, by camera work to create
that help Alaska move forward.
Thank you for the opportunity to speak.
Thank You, Representative Inam.
Is there further discussion?
Senator Willakowski.
Thank-you, Mr. President.
Good morning.
I want to start out by saying what this bill
positively, categorically, does not do.
There's been a lot of wildly inaccurate statements on this floor.
This bill does
not change our corporate income tax rates at all.
This is not a tax bill.
This Bill does
not raise taxes on Alaskan businesses by one dime.
This bill does not increase costs to Alaskans by one dime.
It does increase the cost for Alascans businesses by
one time.
It doesn't cause companies to stop shipping in Alaska.
Just one example of the wildly inaccurate statements that have
been made on this floor.
We heard a statement made by a member that a similar bill was
and caused their prices to increase for Netflix.
So I had my intern do a quick Google search
and in about five minutes,
they found that that was not a change
to the sort of tax that changes that we're proposing here,
but rather that is a changed to Maine's sales tax code.
If you look at companies that do business.
Yes, if there is a sales tax, such as what the governor is going to propose,
that would increase the cost, that will increase your cost.
You will not find an example anywhere, anywhere.
Where a similar bill has been passed to this that has increased costs.
There's been research on this.
For example, the National Bureau of Economic Research did a working paper entitled Corporate Taxes and Retail Prices
for firms subject to a single sales factor?
No, zero.
How is that possible?
Corporate income taxes are very complex.
Corporations apportion their income
based on a whole series of different things
such as payroll, sales, property.
They don't look at a state's individual corporate income tax
And again, I have a wonderful intern.
U.A. provides really fantastic interns.
And I had them just pull up a few items, okay?
Because you would think, wow, Alaska's going to increase this.
We're going pass this bill in.
And you will think by the statements on this floor by some people that this is going
to raise our prices.
for out-of-state businesses.
They pay nothing.
You ship products into the state of Alaska, right now,
you're probably paying nothing,
whereas you go into a store in Alaska
and they're at a competitive disadvantage.
They're paying the corporate income tax.
Yet these companies use our broadband.
They ship the products
into our state-funded ports or airports.
They use R-State-Funded roads.
When the roads need to be plowed there at least theoretically plaid by our state-funded DOT
If there's a lawsuit or workers cop case that goes to our State funded courts our Alaskan businesses are paying that mr.
Mr. President these outside companies are
paying zero
That's not fair to Alascan companies. That is not Fair to alaskans consumers this bill
fixes that. But let's just look. And by the way, you know, I've heard this. I think some people like
to derogatively refer this as the Etsy tax. Right. So we looked up and what we found was Etsy,
according to their global statistic, 97% of those who sell on Etsy sell out of their home.
The businesses in the United States are not C corporations.
They're not c corporations, they're sole proprietorships,
they are LLCs,
they have S corporations guess what?
This bill only applies to C Corporations.
This Bill does not apply to 95% of the businesses
in United states.
Of that 95%, the ones that are currently paying taxes
to some other state.
of that, they may end up paying, but they're probably already paying a corporate income
tax to another state. So it would not result in a penny more for those corporations. Instead,
it will result, as you've heard, of a shifting from other states' treasuries to the state
But let's look at some of the prices because I know that's that that one thing that we first. Oh, it's gonna raise prices really
Well, let us look right now you buy a snow shovel. I understand that in June. How a couple weeks
So you can buy snow shelves
They were sold out
And I asked my staff I has my turn well, what does it cost to ship a Snow shovel to Alaska?
20s and this is a
Yokota Snow Shovel
Aluminum
Okay, large capacity, we need large
capacity here, $26.99 to ship it to
SICKA, I don't know why they picked
SIKA. I'm thinking of the finance
co-chairs, they get some snow down
there too. $2,699 to
ship at the SICA on Amazon, where we
currently have a 0% corporate income
tax. Now you would think, okay, wow, if
if companies are going to charge more
for states where they have a corporate income tax that they're required to pay,
they are going to add on a little bit more, right? Well, guess what? California, we know
California has high taxes, all right. Wow, it's the same exact price to ship it to California.
Los Angeles, $26.99. I said, well, what about Minnesota? Minnesota is the highest corporate
Surely, it's more in Minnesota, right?
Surely it is more.
Surely they're adding on 9.8%.
Well, guess what, $26.99 in, Minnesota.
$2,699 in Dallas, Texas.
I said, well, what if you buy a Gerber,
Gear, Strong, Arm, Knife, Fixed Blade, Tactical Life?
Surely They would charge a tax on that.
Well guess, What?
It's 99.95 seems so high.
I don't know.
99.95 to ship it to Anchorage.
It's also 99, 95 to shift to Minneapolis.
The highest corporate income tax in the United States.
Just like it's 99 95, to Ship of the Dallas, Texas,
and 99 90, 5 to Shippet to Los Angeles.
I said, well, what about a pair of boots?
What about pair under armor, stellar mid-military
tactical boots.
Surely, they must charge a corporate-income tax
increase for that.
Well, guess what?
100 bucks in Los Angeles, 100 Bucks in Minneapolis.
There is no additional charge for a corporate income tax.
And 30, that's why 36, at least, other states do this.
Now I've heard comments.
Well, we haven't studied this enough, right?
That's one we loved here, which is,
it was just introduced at the last minute.
No, it wasn't, no, wasn' it?
was proposed by the governor.
His own task force proposed this idea,
not last year, not the year before that,
not here before, that.
But on August 5th, 2021, okay, how many years goes that?
And at that time, the revenue commissioner,
Lucinda Mahoney told the fiscal policy working group,
testifying that quote the governor would support this bill if it were passed by the
legislature. This was not my idea. I wish I were smart enough to come up with
and I I wished I even knew this was an issue I had no idea this
was even an issues this what's the Governor's idea
We introduced the bill after the governor gave me a copy of it
In 2023 that's three years ago. It didn't pass
introduced it again on
February 25th
had multiple hearings
Passed overwhelmingly went to the house
passed overwhelmingly by partisan
all of a sudden it becomes a political issue for some reason. You know, we get
to make a decision in this body. Do we want politics or do we
want policy? I don't know why some people have chosen politics on this
because it's not political in other states. That's the baffling thing about
this bill. How is this a politically issue? You can look at some of the most
conservative states
in the United States of America, this is not an issue.
This is, they don't make it politics in those states.
They say, well this good policy.
And just to give you a couple examples, Mr. President.
And again, at least 37 states
have used market-based sourcing.
38 states use a single sales factor.
Idaho.
Idaho is not exactly known as a liberal bastion.
Okay, they have 86 Republicans and 19 Democrats.
What's the, it's like 80%.
They adopted both a single sales factor
and market-based sourcing by a vote of 67 to zero
in the house and 33 to the zero in a Senate.
Okay, let's move on to Liberal Kansas, where just last year, 119 Republicans, 46 Democrats,
they adopted, again, both.
I heard some comments made, well, we don't know that some states do one or the other.
No, no.
We know.
Kansas.
A combined vote of 118 to four passed a very similar bill.
Okay, let's move on to
liberal Arkansas, how about
Where they have their liberal governor Sarah Huckabee Sanders
Who enacted a bill
Big respectfully in the house masons 122 to in 1 24 3 prohibit impugning motives such as implying partisan
Motivation for voting as opposed to policy motivations. Thank you. Representative Sider
Please take that.
Mr. Bullock, let's see.
Thank you, Mr President.
I'm not imputing anyone's motives.
I am simply noting that other extremely conservative states
like Arkansas, where they have 110 Republicans and 25 Democrats
passed a similar bill to this,
96 to zero on the House,
and 35 to 0 on Senate.
In fact, the Chamber of Commerce in Arkansas
noted that the bill
They recognized that 37 and 38 other states do something exactly same.
The Tax Foundation, the Arkansas Tax foundation, a similar, very,
very conservative organization supported the bill.
Because they recognized it, put Arkansas at a competitive disadvantage not to have
such a bill in place.
Mr. President, I heard some comments made about what.
We can't do this because we don't have the regulations in place.
You know, lots of concern about that.
I wish the regulation's were in-place.
But you know what?
We don' have any guarantee that if the governor had
signed this bill, the regulators would be in
place by now either.
Because guess what, we passed a carbon tax bill back in 2024
and the regulator still aren't promulgated yet.
Well, here's the kicker.
Guess when companies would be required to pay their taxes for this bill?
They wouldn't be require to the taxes of this Bill until next year.
The taxes are not due until May 15th, 2027.
In fact, I asked legal about this.
that the regulations aren't in effect.
Is this creating some problems?
And I made a copy and I put it on your desk.
And what they said was in a memo dated yesterday,
quote, because the Department of Revenue or whoever applies the tax laws,
it will likely be the best source of information for how it intends to implement the bill.
In other words, the department of revenue can implement this bill and work with taxpayers on it.
And then, but here's the kicker, they went on to say,
remember, however, that taxes for 2026
will not be due until 2027,
giving the department and taxpayers
some time to determine how to implement this bill.
The department, and the taxpayers have a year
and four months to figure out how this bills
gonna be interpreted, a Year and Four months.
That's plenty of time.
I'm glad to see that people are concerned
about the business community.
Again, this bill does not impact Alaskan businesses.
This bill impacts outside corporations.
In fact, the vast majority of Amazon companies
are Nazi corporations,
the largest sellers on Amazon, by the way,
are Chinese companies, 57% of the
largest companies are China's companies.
Are we really voting no on this because we're worried
about how this is going to impact the Chinese companies,
Mr. President, is that really why we are voting
no in this?
The legal issues that have been brought up,
concerns about equal protection, those are baseless.
Again, there's a memo on your desks,
be asked to let you legal.
There's no issues there.
that have been passed in 37 and 38 other states.
This is not controversial in other States, it's just not.
And so we have an opportunity to collect some revenue,
a big chunk of which will not even result
in out-of-state companies paying more,
it'll result in the shifting of revenue
from other state's treasuries.
Alaska. This will help Alaskan businesses. Actually, this will provide an incentive
for high-tech companies to come to Alaska to do business.
If you think that collecting revenue from tech billionaires,
which this bill does, before we collect from working Alaskans,
which apparently we're going to hear proposals to do tonight.
If think it's better to collect revenue
from Tech Billionaires than to go first to working Laskins,
you should vote yes on this Bill.
If we think we should be collecting
revenue for Chinese corporations before
American Alaskan residents to start paying attacks, you should vote yes for this bill.
If you think it's unfair that Alascan businesses are put at a competitive disadvantage
because they pay the tax while outside corporations pay nothing,
you shouldn't vote, yes, on this Bill. If we think that we should start collecting from outsiders
who are taking advantage of our structure and paying zero and instead getting that money from
like people's PFDs, you should vote yes for this bill. We've got a state to run.
We have constitutional obligations to pay for our government. And when we let outsiders,
tech billionaires, slip by and pay nothing, and how dare we go to Alaskans and say, we want to
tax you. You want take your dividend before we're going to tax, collect revenue from tech
You should vote yes on this mr. President. Thank you.
Thank You, senator Rolikowski and senator yand
Thank, you mister president. I'd like to tell you I showed up with some prepared notes, but we all know I'm not that organized
So I want to shoot from the hip and bore you guys to death on the history of tax law
There's probably funner things on The planet to study, But I find myself doing it quite often so
I want to be very clear, if this was a sales tax, I would not support it.
This is a corporate income tax.
So we're going to talk a little bit about that.
43 to 4,500 years ago, there's records regarding the first corporate-income taxes ever used
on the planet.
And there is, you could go to ancient Egypt.
There's a lot of places.
What did they pertain to?
They pertained to grain.
the basic necessities for us to stay alive.
They had to do this because people were griping
and not agreeing on whose water was whose,
whose irrigation ditch was who's, whose canal was
who whose infrastructure.
Everything back then pertained to infrastructure
and staying alive, so they agreed that they would collectively
pay a corporate income tax so that
they could build these things out together
so their societies could succeed.
Follow the trail of corporate income tax from the next 4,000 plus years, and there's been a lot of adjustments, right?
Could you make an argument that it's going to be passed on to the consumer? Of course you could.
Every cost is, but when you're close to 40 other states and the state of Alaska is a drop in the bucket,
I think that's a pretty weak argument.
If you look at it from a standpoint of just history on taxes and how you get to this point, I want to
Every dollar of income in America is taxed, every dollar at the corporate level and in personal income too as well, but that's not what we're talking about here and it's a good thing that we are not because I would not support it.
They cannot be taxed on that again in California. It's against the law. The United States Supreme
Court ruled long ago, double taxation is not legal. So they're going to pay it here,
or they are going pay in in california. Now let's pick a state that doesn't have an income tax,
corporate income, tax. We say, well, you're gonna drive up costs because they aren't gonna pay
it there. Wrong. Because if it's not taxed here and it is tax than the state they based out of,
So do you want it to stay in Alaska or do
you wanted to go to California or another state or Washington DC? I
Truly believe
We will spend the money better in Alaskan than Washington, DC. We'll spend it. That's why I supported this from day one
I truly believe I pay a lot of corporate income tax. I totally believe in that structure
Going back for 4,500 years compared to a sales tax, I'm not gonna support a a sale tax right so
Here we are today. There's been some valid concerns raised. Our member from
Ketchikan, our member for Fairbanks, very valid
concerns. I was a proud supporter of this bill and I am still a
proud support of the concept.
I'm very much looking forward to the changes as mentioned earlier from one of
our representatives that he would like to make and and i do want to see this back
as soon as possible.
My daughter was a legal intern in Idaho last year, worked at the Capitol before moving on to her current job, and yeah, they passed this, right?
They passed it overwhelmingly, unanimously, so let's hash through those issues as fast as possible and get it done.
Thank you.
Thank You Senator Yant, Representative Ruffridge.
Thank, Mr. President and I appreciate the sincere debate today.
want to align myself with a few comments, certainly from the comments from
the member behind me from district 32 and I appreciate the the effort and work
that he puts into these fiscal issues. I like the
member from District 1 was an initial supporter of this bill and certainly as
the previous speaker mentioned continue to want
to support something in this vein but what I will say Mr. President is that
And the timing on this override today is such that there are concerns
such as brought up by the member from District 32 that I still haven't heard great answers to.
And I would like to take the time in this session, particularly while we are discussing many of the issues in regards to our fiscal situation.
to bring up some of the concerns that are in this bill, and certainly as we go through that process,
we should find more support for this and get it over the finish line.
I think that there are a number of compelling reasons to support this Bill and I
think they were argued for very well by the member from District K from the other body.
who's passionate defense of this and very clear and level headed arguments are very compelling.
But what I will say as a owner of a small business in this state,
I'm not entirely certain that the small-business argument for this bill is a valid one.
As mentioned before, 95% of the businesses in
this country and actually in the state.
are not sea corporations, and this bill only applies to sea
corporations. If we are saying that the small businesses of our state
at run 95% of the businesses are going to be affected by this
bill, I think that's an argument that does not hold a lot of water,
because this Bill will not apply to them.
nor has any tax applied to them in this state.
This tax would apply to out-of-state businesses.
That is true, and the only thing that is unfair currently
on that playing field is with other C corporations
that may or may not operate in the state of Alaska currently.
And so for that, I think there is a little bit
of gamesmanship, if we'll call it that to say
that this would affect our Alaskan small businesses
or that they are somehow playing on an unfair playing
That certainly is not true.
That being said, I think that this being adopted in many other states is something that we
should certainly consider and still consider as the session goes on.
But as I said in the start of this, timing is everything.
I thing the timing on this at the starting of the this session is
not the right time and certainly hope that
we continue to have this debate as session
goes off.
Thank you, Mr. President.
Seeing none, I'm sorry, please go ahead.
Thank you, Mr. President, and Mr Speaker.
It's true that
This body current adopted the current tax enforcement system in 1970 before the whole concept of the internet
Commerce was did not exist at that time
And it's true that businesses conducting commerce from afar generally generating income from Alaskans
are not subject to the same taxation structure as
Alaska in businesses, but
It's also true
Alaska continues to face fiscal obstacles.
Those are facts, we know those things.
But as I listen to the debate,
and I know about the progression of this bill
through the legislature, it's been awkward.
It's then awkward right up to
the point of having this veto override vote today.
And it has been mirrored in our rather awkward floor speeches
today,
I think that we're flailing around,
trying to find a solution to our revenues problems,
and maybe not considering that
we could actually cut taxes and make things fair,
or we can examine some other adjustments to spending.
And perhaps we should have a full fiscal plan before us,
and not just
one little piece at a time.
A lot of people voted for this in this body.
And I think that's a sincere desire
to see something change and see
something fixed.
The arguments that I've heard today is it's we need to do this as fast as we can
Well, generally when you do taxes and you
Do revenue measures perhaps fast? As you can isn't the isn't the way to approach it. I heard it
It's not fair. Well let's address it
Not fair, but it is not necessarily fair just to add taxes with no other type of
No other fiscal plan no, other bills before us
I heard it's not a tax bill.
Well, it is not tax well.
I have heard the term tax a whole lot.
And then I've heard 37 other states are doing it, which doesn't also mean that we should
be doing that.
So I guess where I'm at, I think that should be deliberate.
I should think we could be careful of our considerations.
I would think should we be thoughtful.
And if we are going to go down the road of having a task, this should
be put together with some careful consideration, and if I were to override the veto and it became
law, we found that it would not go fast. We don't have the regulatory package in existence.
We didn't know what those provisions would look like.
We haven't had time to discuss it. And if passed, SB 113 becomes just another bill in an
unconstrained in any way by fiscal plan so I'm here we are here to do the right
thing not ignoring the need to examine Alaska's fiscal situation but without
some guardrails we risk perpetrating a tax and spend cycle the state government
order to do the best job for Alaskans and I stand firmly on that and with all
things considered Mr. President I cannot support over writing the veto for SB
113. Thank you Representative Johnson. Is there further discussion?
Please represent me Trump. Mr. President. Thank you, sir
I rise in support of veto override mr. president the member from the other body who brought forward this bill
Originally spoke very eloquently to this could be called the support Alaska businesses act
I think we all believe shopping local is important
This is the one step that we can take now to show we actually believe that that putting Alaska
businesses on an even playing field with other businesses who are selling
items to Alaskans online and our state is not collecting revenue for that it
makes common sense and there's a reason why this common-sense legislation has
passed overwhelmingly and all the other states that have already been said
I am encouraged. Sounds to me, Mr. President, just taking a poll. There sounds like there's
90 percent support for this philosophically. So I'm encouraged by that, this body. It looks
to be like one way or the other, we will get there. And I would prefer to get
there sooner than later, knowing the mechanics of how things move. But I do intend to support
the override. Thank you, mr. president.
Respectful discussion we have had, Madam Majority Leader,
would you please describe exactly what we will be voting on?
Thank you, Mr. President,
Mr Speaker.
This is just a reminder to members
and to the folks that are watching this vote.
A yes vote is in favor of overriding the governor's veto.
A no vote maintains the Governor's Veto.
This vote requires 45 yes votes to override the veto
Thank you, Mr. President.
Thank You, Madam Majority.
Just underline that, it does require 45 votes in the affirmative to override the veto if
you are ready for the question.
Brief at ease.
Now, with the joint session, please come back to order.
It's a reminder of what the majority leader told us earlier.
Yes, vote is in favor of overriding the veto.
No vote will well maintain the governor's veto,
this vote requires 45 votes in the affirmative
to override the video.
Are you ready for the question?
The question being, shall the legislature override
the Governor's V-Dope of Senate Bill 113?
Senator Stedman, Senator Tilton,
Senator Tobin,
Senator Wilakowski,
Senator Yunt,
Senator Bjorkman
Senator Klayman
Senator Cronk,
Senator Dunbar,
Senator Giesel,
Senator Gray Jackson,
Senator Hoffman, Senator Kaufmann,
Senator Kawasaki,
Senator Keel,
Senator Merrick,
Senator Myers,
Senator Olson,
Senator Rousher,
President Stevens,
Madam Secretary, please tally an amounts of vote 14 yeas 6 nays
Thank You mr. Speaker house members may proceed to vote
Well the clerk, Please lock the roll does any member wish to change his or her vote
Will the Clerk please announce the vote 21 yeays 19 nay
Thank you, Madam Secretary.
Please tally and announce the combined vote.
35 yeas, 25 nays.
So by a vote of 35 yays to 25 mayes,
the joint session has failed to override.
Madame Chair, Leader Giesel.
Mr. President, Mr Speaker, I move that the Joint Session
be adjourned.
Thank of objection, the joints session is adjourn.