Support for a proposed cut in Hawaii’s personal income tax may come from as far away as Harvard University. A study coming out of that esteemed institution of higher learning points out that Hawai’i is one of the richest states
Support for a proposed cut in Hawaii’s personal income tax may come from as far away as Harvard University. A study coming out of that esteemed institution of higher learning points out that Hawai’i is one of the richest states in terms of tax surplus.
Governor Ben Cayetano revealed last Friday that he wants to drop the top rate of his state’s income tax a full point to 7.5 percent, a change that would take effect in 2005. The rollback isn’t easy to get excited about immediately, because if the state’s lawmakers approve the proposal Cayetano plans to make during the 2001 legislative session, several years will pass before the break starts to show up in paychecks. But it’s a proposition that’s sure to intrigue the public and score big political points for the Democratic Party, the majority party in the Legislature.
Taxpayers everywhere are always in a mood to pay less, and the ones in Hawai’i might be even more eager to get behind Cayetano’s proposal now that their state is recognized as one of the most tax-rich. According to a study by public policy researchers at Harvard, Hawai’i is among the top 10 states with the largest surpluses in tax revenue.
There is risk in assuming that a state economy will be booming long-term and can do with less of a cushion in its funding. The tax cuts Cayetano favors would be realized after he leaves office. But he correctly believes it’s a worthwhile idea to let wage earners keep a part of their income that now goes into state coffers that are in good shape.
It will be interesting to see how the Legislature, which approved income tax cuts in 1998, handles a request to do it again.
