Now that April 15 and April 20 have passed, many people have put taxes in the back of their minds. Unfortunately, $3.00+ per gallon for gas, rapidly rising property taxes, water bills, housing rents, and other soaring costs continue to
Now that April 15 and April 20 have passed, many people have put taxes in the back of their minds. Unfortunately, $3.00+ per gallon for gas, rapidly rising property taxes, water bills, housing rents, and other soaring costs continue to challenge the majority of Hawai’i’s taxpayers.
The Legislature now has less than a week to pass meaningful tax relief for the vast majority of tax-payers.
One proposal is to cut taxes by expanding the tax brackets. This tax cut will help 80 percent or roughly 472,000 of all Hawai’i tax filers.
Another proposal is to increase the standard deduction. This will help the lowest end taxpayers and a substantial portion of middle income taxpayers. In fact, increasing the standard deduction to 75 percent of the federal level will benefit 64 percent or roughly 375,000 of all Hawai’i tax filers. This is an initiative Governor Lingle has proposed for four years. With the surplus in the state coffers, now is the time to pass this important piece of legislation. It has been supported by the Tax Review Commission and is long overdue in its implementation.
A third proposal is to create a Hawai’i earned income tax credit. The EITC purpose is certainly noble in that it attempts to primarily help the low-income working taxpayers with children. It benefits, however, only a narrow slice of Hawai’i’s population — roughly 12 percent or 72,000 of all Hawai’i tax filers. For example, the EITC fails to provide any tax cut to the elderly living on retirement and investment income, the handicapped or unemployed without earned income, or a married couple with more than $13,750 of earned income and no children they can claim. The EITC also fails to help a married couple with over $37,263 of income, no matter how many children they have (a couple each making $10 per hour earns about $40,000 per year).
The Administration has recommended two final tax relief proposals. One proposal provides a one-time $150 per person refund. Another creates a $100 per person refund for the taxes paid on food, medical services, and non-prescription drugs. It is unconscionable to tax our residents for food and medicine.
With a $600 million surplus and tax revenues growing in the double digits, we respectfully urge the Legislature to return at least $120 million in tax relief to the struggling families of Hawai’i. This is the right thing to do at the right time. Please contact your legislator today and make your voices heard.
Kurt Kawafuchi is Hawai’i Director of Taxation.
