The Daily Alaska empire., 1945-02-09
.es. of a resident is subject to the

ces. of resident is subject to the tax.
 The tax rate applied to individual incomes varies from 2 per cent or net incomes of $2,0O0 or less, up tC 4 per cent on incomes in excess ol S10,000 The rate on corporation; and banks is flat 1 per cent ol net income, with insurance com. panies not subject to the net in come tax, as, in accordance witf general procedure, they are taxed in gross premiums.
 Partnerships
 Partnerships must file returns, but pay no tax; the tax being collected frcm the individual partners or their distributed shares. The bill as concerns estates and trusts and accounting periods, follows Federal provisions The bill provides fol review of tax liabilities in dispute and sets up an administrative de- partment with supervisor ap- pointed by the Governor with legis- lative consent.
 Question by Senator Coffey-How is it proposed to collect taxes from non-residents, such as wholesale houses that do large volume of business in the Territory?
 Prof. Harsch-If they are actual ly doing business within the Terri tory or own properties within it they are subject to the jurisdiction of the Territory.
 Senator Coffey-Where a com pany does business in several states as well as Alaska, how is the a. mount of tax owed the Territory determined?
 Company Tax
 Prof. Harsch-Where such. com- panies keep separate accounting records of business within the Terri tory, those records are accepted to establish the tax. Where no sep arate accounts are kept, there is a formula developed through exper- fence in the 36 States already hay ing income tax laws. The formula is based on a comparative percen- tage of the concerns total net in- come; this bill incorporates the formula of the State of Minnesota, which is recognized as successful Where tax arrived at by formula would seem to be inequitable, dis cretion is left with the administra- tor to arrive at a fair tax.
 Senator Howard Lyng-You have been connected with the tax ad- in the State of Wash ington. Does that State have an income tax?
 Prof. Washington does not have net income tax. Three such laws have been enacted, two by the state legislature, one by They have been declared unconstitutional by the courts, due to peculiarity of the Washington State Constitution. sA ffi 3,
 Federal Employees ui
 Senator Coffey-How would the provision of the bill be effective regarding Federal Govern ment employees in the Territory?
 Prof. Harsch-It is my under standing, though I do not know this first hand that the Federal with act makes provision for of State taxes. If it does not. they would make a return to be filed with their tax payment on the March Is following the end of the tax year.
 Senator Coffey-What amount in tax revenues would be eliminated by the repeal of Territorial license taxes under this bill?
 Prof. Harsch = Approximately $286,OO0 per year.
 Senator Coffey-At what amount do you estimate the revenue re- turn to the Territory under this bill?
 Prof. Harsch-There are no fig ures on which to determine that except very roughly. On the ba- sis of 1941 Federal collections the yield from individual incomes would be about $400,000. However, these collection figures do not show filings from addresses outside the Terri tory, as the Federal collections are by collection districts. Also, such credits as are allowed for the School Poll Tax, etc, would be de- ducted from that amount.
 Territory To Benefit
 Senator Coffey-Then, if we take in $400,000 from this tax and by it eliminate $286,0O0 that we are now getting, and pay out $62, 500 per year for administration (according to $l25,000 appropriation for the bien- nium the Territory stands to bene- fit from this proposed tax approM- mately only $50,000 Is not that correct?
 Prof. Harsch-The $400,000 per