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Column - Ending Automatic Payroll Tax Increases


Location: Unknown

By Governor Sean Parnell

Benjamin Franklin once said, "In this world nothing can be said to be certain, except death and taxes." It was true then, and it is true today.

Even here in Alaska, a state without an income tax or statewide sales tax, many Alaskans are unaware of a "secret" tax increase annually on workers and employers. It comes directly out of your paycheck and goes to the Alaska Unemployment Insurance Trust Fund.

The Unemployment Trust Fund covers payments to the unemployed. While the Fund must be solvent, so it can make those payments, there is no reason for it to be bloated with more funds than needed, especially since roughly one quarter of those dollars come from Alaskans' paychecks and the other three-quarters are paid by Alaska's businesses.

Unbelievably, Alaska law allows for automatic increases from employees and employers, regardless of the Trust Fund's solvency. Current law permits the State of Alaska to collect and stockpile your money -- even if it doesn't need to.

Making matters worse is Washington, DC's addiction to taxation. President Obama's deal with Congress in January to hike federal payroll taxes on every working American has worsened the pain Alaska's families feel. It seems no matter how hard people work, the government, State or federal, makes it increasingly difficult to get ahead.

Most Alaskans forked over on average $927 in unemployment insurance contributions from their paychecks in the last five years. Further, Alaska businesses paid $2,792 for most employees over the last five years. All the while, the Alaska Unemployment Insurance Trust Fund has taken more of your paycheck every year, and now has a balance of $257 million dollars.

That's more money for government to sit on, and less money for Alaska families to pocket, and it all leads to fewer jobs for Alaskans. While the federal government increases payroll taxes, we should do what we can to lessen Alaskans' tax burden. I have introduced legislation to stop this automatic tax increase on Alaskans so that we can keep more money in the hands of hardworking Alaskans.

Also included within our bill are important provisions that enable Alaska employers to continue to receive federal tax credits for unemployment insurance. Without implementation, employers could pay out an additional $378 per employee in addition to what they currently pay to the federal government.

No government should overtax. The State of Alaska must lead the way, doing what is right and ensuring Alaskans can keep their hard-earned dollars.

That is why I am urging legislators to waste no time in passing Senate Bill 25 and House Bill 76. Let's ensure hardworking Alaskans do not see another tax increase this year.

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