The Daily Alaska empire., 1941-02-21
INCOME TAX PASSAGE IS
 POSSIBILITY
Gould Be Enatted at This Session, Says Hdrseh
 as Hearing Opens

termine what is in the income tax bill, to make up their minds on it's principles and to pass it at this ses- sion, Prof. Albert Harsch who draft ed the bill, testified this afternoon before a jam-packed public hearing in the Senate Chamber on Senate Bill No. 10.
 Asked whether he thought the &C., page bill was in a shape in which it could be passed without further con- sideration CT amendment, Harsch said he did not believe it should be passed that way, because that is not the way the legislative process should work"
 Harsch was the only witness called to testify up until 3o'clock this af- ternoon. He was questioned by Sen ators, by Representative and just plain citizens in the galleries.
 Resident Question
 Most of the early discussion dealt with the Territory's right to dis tinguish between residents and non- residents ]. the matter or amount of exemption allowed as the bill provides. Harsch admitted that a similar provision in New York law was held invalid by the U. s. Su- preme Court but that he believed there is very good reason to believe the Court would not so hold on the Alaska law, for the reason that CD Alaska is a Territory and not State, @ there are more reasonable grounds for making such a dis tinction here, and t3) T have noticed in the past few years an inclination on the part of the U s Supreme Court to give considerably greater support to legislative enactments than it did previously
 Senator o. D. Cochran, Nome at torney, observed it seemed to him very improbable that the Supreme Court would reverse itself in this case.
 Fruit Heard
 But Attorney General James s. Truitt said there is no question in my mind, if we can find reasonable classification of residents and non- residents. that our law will stand up." Truitt said it has been de- termined that the Territory can dis criminate between residents and non- residents in matters relating to fish, fur and game Whether it can in oth- CT matters is subject which has , never been passed on by court of last resort, he said.
 The bill, as drawn, allows a $1 900 exemption to single residents, $2,- 900 exemption to married residents and no exemption to non-residents Residents are defined as persons living seven months or more of the year in Alaska.
 Harsch said that no State at pres ent denies exemptions to non-resi- dents while granting them to resi- . dents but he said a number of States qualify the right of non-residents to exemptions.
 Stumped by Question
 Asked by Senator Cochran what the loss in revenue would be if the same exemptions were allowed both residents and non-reSidents, Harsch said it would be extremely difficult to say, but that he would attempt to compute an estimate
 Senator Edward Coffey of Anchor age, who did most of the question ing, declared that it is "an acknow- ledged fact that we are not capable in Alaska of supplying all the people needed in our industries" , Senator Henry Roden of Juneau, said that if the non-residents stay ed out of the Territory our industries could not operate a single season, but on the other hand if all those required to work in our industries !, should remain in the North as resi- dents, they'd starve to death.
 Harsch said the difference in ex- emptions allowed residents and non- residents is justified by the fact that the non-residents do not spend their Alaska earnings in Alaska where they will have turnover creating better business conditions and more taxes, but in most cases take them Outside where the Territory never derives any revenue from the spend ing.
 S750,OOO Collection The Professor said anticipated gross collections under the income tax law were $350,00O in personal net income taxes and $400,O00 in corporation net income taxes an nually. He said these figures did not allow for credits to be deducted, Cor the cost of administration or losses through repeal of license tax sec- lions which the bill would provide
 Net anticipated revenue annually after all deductions and cost, have been figured, would be $441 ,0O0 Harsch estimated
 Administration of the act should not cost more than 10 percent ot collections, Harsch said, citing this as a maximum figure He said the cost during the first. year would be much higher than in later years
 More than 40 States, Hawaii, Puer- to Rico and Alaska's neighboring provinces of British Columbia and