03-17-2021, 08:55 PM
https://www.staradvertiser.com/2021/03/1...ome-tax-2/
A bill that would increase Hawaii’s income tax to the highest in the nation for the state’s top earners passed the full Senate on Tuesday by a near-unanimous vote.
A bill that would increase Hawaii’s income tax to the highest in the nation for the state’s top earners passed the full Senate on Tuesday by a near-unanimous vote.
Senate Bill 56 was approved 24-1. Sen. Gil Riviere (D, Heeia-Laie-Waialua) was the lone no vote, while Sen. Les Ihara (D, Moiliili-Kaimuki-Palolo) voted yes but with reservations. The proposed legislation will now move to the House of Representatives, where it will likely face resistance.
The proposed legislation would impose a 16% tax on individuals earning more than $200,000 a year, heads of households earning more than $300,000 and joint filers earning more than $400,000. The income brackets are currently taxed at 11%.
If the bill ultimately passes, Hawaii will overtake California as the state with the highest income tax. California’s rate is 13.3% on those earning more than $1 million.
The measure also includes increases to the capital gains tax, corporate tax and taxes on high-end real estate sales.
The bill cites the state’s plummeting tax collections brought about by the coronavirus pandemic as the rationale for the tax increases. By the end of last year, Hawaii officials were estimating the state would have a budget shortfall in excess of $2 billion. The tax increases would expire after 2027.
The measure has attracted support from local unions for government workers, including teachers, social service organizations and progressive public-policy organizations worried about furloughs of government workers and possible cuts to programs such as AIDS services and housing assistance for the poor.
“It makes sense to ask those who are fortunate enough to be doing well in this economy to pay more, in order to close the deficit without slashing the critical government services that so many struggling working families have come to rely on,” wrote Nicole Woo, director of research and economic policy for the Hawaii Children’s Action Network Speaks! — a nonprofit that advocates for children and families — in testimony supporting the proposed tax hikes.
However, a federal aid package is expected to largely plug the state’s budget hole. The American Rescue Plan Act, which is poised to pass Congress, would provide Hawaii with more than $6.1 billion in funding. The package includes an estimated $1.6 billion to bolster the state’s budget.
The proposed tax increases have attracted opposition from the business sector. The Hawaii Chamber of Commerce said if the measure passes it will “reinforce the image that Hawaii is a poor place to live, work and invest” and “undermine efforts made to turn Hawaii’s economy around.”
The Tax Foundation of Hawaii warned that income tax hikes would ultimately put a drag on Hawaii’s economy.