7 States Have No Income Tax; It Could Soon Be 6

Alaska is having money problems
By Kate Seamons,  Newser Staff
Posted Dec 26, 2015 4:16 PM CST
7 States Have No Income Tax; It Could Soon Be 6
Under Walker's proposal, an Alaskan with a $10,000 IRS tax bill would pay Alaska $600.   (Shutterstock)

It currently pays to live in Alaska—literally. In addition to the lack of a state income tax, Alaskans have since 1982 received an annual dividend check paid from the state's oil wealth savings account. But the glory days may be over. Gov. Bill Walker this month proposed some big changes in the face of low oil prices. Among them: a state income tax and a change to how the dividend is calculated that would trim it way down—from a record $2,072 this year to about half that in 2016. The New York Times explains that every barrel of oil that flows though the Trans-Alaska Pipeline results in a royalty and a production tax being paid to the state. Interestingly, the state has the distinction of being the only state to repeal an existing income tax, which it did in 1980 after oil began flowing through the pipeline.

In the late '80s, about 2 million barrels were pulsing through the pipeline each day; this year's average is about 505,000, reports the AP. And while oil revenue previously covered about 90% of what lawmakers could spend on the state, that figure is down to about 75%, leaving the state blowing through about $10 million in savings each day. The AP points out that Alaska isn't the only oil-producing state dealing with this headache, but its situation is somewhat unique, as states like Texas or Louisiana have other industries to help with the shortfall. What Walker is proposing is a state income tax equal to 6% of what each resident pays in federal income taxes. He's also looking at higher alcohol and tobacco taxes, and upping the tax on other industries, like fishing and tourism. The Times reports the legislature will look at what to do next month. (More Alaska stories.)

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