The Wrangell sentinel., 1941-02-21
New Tax SetuD For Territory Before SOlOns

aska net income tax on both lndl- Yiduals and corporations was intro duced in the Territorial Senate this week as Senate Bill No. 10 (remem- Der the number) by Senators Don Carlos Brownell. Hjalmar Nordale and N R. Walker, as members on the Committee on Taxation.
 Repeating of 22 miscellaneous taxes and the equivalent of repeal (by allowing offsets against income tax paymentsl of 40 Federal li- cense taxes is provided by the bill
 Short title of the bill is the "Al- sssKa income tax act" It was drawn by Prof. Albert Harsch of the Uni Yersity of Washington Law School, who has spent several months in the Territory studying taxation problems. He has been drafting sim liar measures for the State of Wash ington for the past 10 years.
 Preamble and Index
 The bill even has a preamble of six "whereases" referring to the present Alaska tax structure as a survival of the earliest frontier days and as "patchwork" of mis- cellaneous taxes of every kind and description, long since Outmoded, and growing steadily less appro- priate. The present structure is cal led negotiable. burdensome and ar bitrary.
 Growth of the Territory, the pre- amble states, requires the enact ment of an effective and just tax program to satisfy existing needs, correct economic abuses peculiar to Alaska to foster the further expan- sion of Territorial activities.
 Tn general, the bill follows out two-thirds of the tax recommenda- tions included in the Governors message, the other one-third being a general property tax, for which no bill has yet been introduced.
 Applies to This Year
 If passed the bill will apply to the taxable year 1941 and succeed ing taxable years.
 The act applies to individuals both resident and non-residents, es- tates, trusts, corporations and banks, both national and Territor- ial. The tax rates proposed on in- diYiduals begin at two per cent and increase one-half per cent for each additional thousand dollars of tax able income until they reach max imum of five per cent for incomes in excess of six thousand dollars of taxable income.
 Non-residents receive no exemp- tion. For residents there is an eX- emption of one thousand dollars for single persons two thousand dollars for married persons and four hundred dollars i1~ each dependent. The tax rate on estates and trusts is the same as on individuals. The tax rate proposed on corporations and banks is flat rate of four per cent on the net income.
 A commission to be known as the Alaska Tax Commission would be created by the bill. It consists of the Territorial Treasurer, Auditor and Attorney General. with the Treasurer. as Chairman. The Tax Commission will appoint the neces- sary employees to help in the ad- ministration of this act, including an executive official to be known as the Supervisor of Taxation.
 On Net Income
 The tax is upon net income, i. e. gross income less the deductions
 
 is defined as it is in the Federal law. The gross income of resident individual includes income from ev- cry source whatever. Gross income of a nonresident individual, bank or a corporation. includes only that derived from sources within the Territory. While it may appear that "gross income is easily determined,
 fact many complex problems, re- quiring statutory provisions. are nresented. The Federal law has been followed as nearly as possible, but some variations are here required because of the limited geographic frea to which the tax applies and the later effective date of the act.
 The same type of gross income are excluded and the same deduc- tions- for business expense, inter- est, taxes. losses, bad debts, depre- citation, contributions, etc. are per mitted as under the Federal law In the case of depletion however a limitation upon the total amount al. lowed, not found in the Federal law is proposed. Capital gains are treat. ed as gross income and capital losses are treated a deductions to the same extent that they are under tht Federal law.
 Follows Federal Form
 Individuals, fiduciaries, banks ant corporations are required to fil, tax returns, on forms which cores pond with the Federal income ta1
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