Thirty-eight years ago, Hawaii lawmakers enacted a “modest” renter’s tax credit of $20 per year to help alleviate some of the challenges that low-income renters faced. Qualified renters — those whose combined family income was less than $30,000 — received an increase to $50 per dependent in the early 1980s.

Most people today are unaware of the renter’s tax credit, probably because it is so inconsequential. The median rent in 1980, according to the Census, was just $311. As rents have skyrocketed — the median rent in the state is now more than $1,400 — the amount of the credit has not budget in three decades. The income level necessary to qualify for it hasn’t increased in a quarter century.

Meanwhile, median incomes have stagnated. The 44 percent of people who rent homes in the island work more hours for less buying power than they did in the past. Today, the $50 per year tax credit represents less than 3 percent of the fair-market rent of $1,800 for a two-bedroom home on Oahu for a single month.

Housing Rent Own Apartment Furnished Sign

For those who qualify, the renter’s tax credit is $50 per year for each dependent.

While the situation calls for a concerted effort on the part of policy-makers to find long-term solutions, there are short-term moves that could begin to rebalance the situation. On Oahu, for example, opening ohana housing to all renters, as advocated in a previous Civil Beat editorial, could be helpful.

But many renters need immediate relief, and a worthy tax credit should keep up with the times.

A 2014 omnibus bill in the state House and Senate would have boosted the renter’s tax credit from $50 per dependent to $146, as one of an array of measures to improve the economic situation for the islands’ numerous low-income earners.

Unfortunately, the tax credit measure died in a conference committee led by then-Sen. David Ige and Rep. Sylvia Luke, who chaired the House and Senate money committees.

The nonprofit Hawaii Appleseed Center for Law and Economic Justice has called for tripling the tax credit to $150 per person for qualifying households, and for doubling the income level for families who can receive it, from $30,000 to $60,000.

This would allow an additional 100,000 people to qualify for the tax credit, according to U.S. Census data.

There would be a cost. The state spent $4.3 million on the tax credit for more than 41,000 taxpayers in 2012, the latest year for which data is available.

The Appleseed Center estimates that amending the tax credit could cost the state about $23 million. (State tax credits often go to developers in Hawaii, to help them build low-income housing — without making a dent in the shortage of affordable housing.)

In some ways, updating the renter’s tax credit and broadening its reach would be akin to a minimum wage increase. It would give a boost to the people who need it most, and they would likely spend the money for basic needs, thus stimulating the economy.

It makes sense for policy-makers to strengthen a much-needed buffer for people caught between Hawaii’s many low-income jobs and rents that are driven up by the housing crunch. It should be done, and as soon as possible.

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