Sponsor introduces House Bill 152 to fund education with a head tax plus a 4% top‑rate income tax; committee schedules further hearings

Representative Galvin introduced House Bill 152, a proposal to create a broad‑based revenue source for public education that combines a per‑person head tax with a high‑earner income surtax.

Galvin told the committee Alaska has a constitutional responsibility to provide a quality education and that current funding levels and volatile oil revenue leave schools and teachers underfunded. “HB 152 proposes 2 steps,” Galvin said: “Firstly, a $150 per person education head tax for anyone who earns wages or self employed income. Secondly, a 4% flat income tax on individual earnings would be taxed on the dollar amounts over $150,000 or dollar amounts over $300,000 if you are filing jointly.” She said the bill also closes an “S‑corp” loophole for business income so profit taken through S corporations will be treated like wages for purposes of the tax when it exceeds the thresholds.

Staff walked the committee through tax design choices: using federal adjusted gross income (AGI) as the base, a standard deduction (the introduced draft uses a $150,000 single filer threshold and $300,000 married filing jointly threshold for the 4% surtax), and a flat 4% rate applied only to dollars above the threshold. The sponsor and staff emphasized they designed the measure to limit burden on lower‑ and middle‑income residents and to target high earners and nonresident workers who earn in Alaska.

David Chang, staff to Representative Galvin, cited modeling and said the fiscal outcome depends on policy levers. He told the committee the introduced draft was predicted to raise between $250 million and $300 million from the income provision and that including the $150 head tax brings projected revenue to about $350 million (staff attributed the higher total to the combined measures and noted estimates vary by model and base definitions). Department of Revenue’s fiscal note was cited by an invited witness and committee members as estimating roughly $300–$350 million in short‑run revenue; individual estimates vary.

Brett Watson, an economist at the Institute of Social and Economic Research (ISER) invited to testify, said ISER prepared a back‑of‑envelope estimate that was lower than the Department of Revenue’s fiscal note but noted limits: Alaska currently has no state income tax, so no state income‑tax filing data exist to observe taxpayer behavior and the analysis is static (it did not model behavioral responses such as changes in labor supply or residency). He urged the committee to treat initial numbers as preliminary and noted the Department of Revenue fiscal note provided one standard short‑term estimate range.

Sponsor and staff also discussed implementation and administrative costs. They told members infrastructure and software costs would be the primary Department of Revenue expense to implement collection; employer withholding and reporting burdens should be minimal because employers already report wages to state labor systems. Staff said only about one quarter of Alaska households would have earnings high enough to pay the 4% surtax under the introduced thresholds, and that the proposal was designed to minimize paperwork for most taxpayers by relying on federal AGI and common tax‑preparation tools.

Representative Kerrick gave the invited testifier five minutes; committee members asked clarifying questions about revenue estimates, nonresident workers and choices of thresholds. Representative Kerrick set the bill aside for further consideration and scheduled an additional hearing the following week.