Tax the rich.
To most, it always sounds like a good idea. If you can afford to have a nice house, perhaps a vacation home, certainly you can afford to pay the taxes that go along with it. We agreed that those with more money should pay more taxes, by being taxed at a higher rate, than those with less money.
That said, the county council’s decision to approve a measure creating a new tax class next year called residential investor, which would apply to improved properties without tax exemptions that are worth at least $2 million, does have its drawbacks.
What’s the harm? Isn’t the county hitting the rich property owners from the Mainland for more money and not the real residents of Kauai? Well, maybe.
About 200 properties on Kauai can be placed into this new tax class. If the tax rate was set at $7.05 — $1 more than the current residential tax class rate — the real property taxes from those homes could generate about $837,000 in additional revenues.
That sounds good. Some councilmembers say that money can replenish the county’s reserve fund, provide relief for some resident taxpayers, and help public transportation and affordable housing initiatives. Again, sounds good. But there is a recurring theme here. The county ended up with a bunch of unhappy residents when they received their latest real property taxes bills and the 2 percent cap, provided by the permanent home use tax credit, was removed. The county also raised taxes on vehicles and trash in its most recently approved budget. The tax rate on hotels went up, too. This latest decision is another case of the county needing more money and getting it by increasing taxes.
We would rather the county consider reducing spending so it doesn’t have to raise taxes. We would love to see proposals for how the county could save money, even if it means reducing some services. We all know from our own experiences that, when our funds are tight, we look back at ways to cut back on spending. An extensive, detailed examination of departmental budgets may reveal ways the county could operate more efficiently.
There was a close vote when the council approved this new tax class on Wednesday, so we’re not alone in this view. Councilmen Gary Hooser, Ross Kagawa and Mel Rapozo cast the dissenting votes against the measure. Council Chair Jay Furfaro cast a silent vote, which went toward the majority vote in favor of the new tax class.
We believe Hooser put it well:
“In another budget environment, I would look at this proposal more openly. I’m not in the mood, nor do I feel it’s in the best interest of this community, just to run around and find money to fill a hole. We need to get a plan from the administration about how they’re going to deal with this budget deficit, and it has to be more than just raising taxes.”