Lawmakers Should Pass Tax Bills To Fix Our Upside-Down Tax System - Honolulu Civil Beat

About the Authors

Gavin Thornton

Gavin Thornton is co-director of Hawaii Appleseed.

Heather Lusk

Heather Lusk is the executive director of the Hawaii Health & Harm Reduction Center.

Deborah Zysman

Deborah Zysman is the executive director of Hawaii Children’s Action Network Speaks!

As we’re seeing on our packed beaches, Hawaii’s tourism sector is coming back to life. But many of our neighbors — unemployed workers, local business owners, struggling families — are still far from recovering. In this last week of the state legislative session, our lawmakers can pass bills to help them during this crucial time.

Those bills — House Bill 58 and House Bill 133 — ask those who are lucky enough to be doing well during this pandemic — the wealthy and profitable corporations (not the ones that are hurting) — to pay a little more to help the rest of us. If we are in a position to help others who are struggling, they’ll be in a position to help us when we need it.

Then legislators can kickstart our economy’s recovery by supporting local businesses, families and workers with full funding of community programs and schools, commercial and residential rent assistance and tax relief for unemployed workers and their employers. 

Economists tell us that we will rebound faster if we keep money flowing to communities. What really makes a state a strong place for businesses and families? Vibrant local shops and restaurants, good schools, consumers with spending power, neighborhoods where workers can afford to live. 

On the other hand, studies of the last recession show that cutting government spending and jobs will harm the overall economy by making recovery slower and harder. 

Beloved shops and restaurants are shutting their doors permanently, and others are hanging by a thread. We still have the highest unemployment rate in the nation. Families line up week after week for bags of groceries from food banks. 

The costs of a pandemic should not continue to fall on the backs of Hawaii’s small businesses and vulnerable families. Instead, they should get the help that they need. 

Local business owners have asked for assistance with unemployment insurance taxes and their rent. Unemployed workers have asked for relief from hefty taxes on their unemployment payments. Social service agencies, schools and government programs have asked for their budgets to be protected from harmful cuts.

There’s a way to help them. Our lawmakers can pass bills that raise revenues from those who can afford to pay more. HB 133 shrinks a tax loophole that goes almost entirely to high-income taxpayers, including non-residents who profit from real estate investment properties in Hawaii. HB 58 raises the tax rate on sales of properties worth at least $4 million and inheritances of more than $3.5 million.

House members gather on the floor with plastic barriers between members on opening day of the 2021 legislature.
House members gathered on the floor on the opening day of the 2021 legislature. Cory Lum/Civil Beat/2021

These bills will not only help pay for sorely needed assistance for our struggling local families and businesses, but they will also help fix our upside-down tax system. Currently a Hawaii worker earning minimum wage pays an average of 13% of their income in state and local taxes, while those at the top pay less than 9%. That’s simply not fair, especially when so many working families are hurting.

Here in Hawaii, we value taking care of our community and helping each other when we can. Please join us and the other nearly 30 organizations that make up the Hawaii Tax Fairness coalition in asking our lawmakers to pass these bills.

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About the Authors

Gavin Thornton

Gavin Thornton is co-director of Hawaii Appleseed.

Heather Lusk

Heather Lusk is the executive director of the Hawaii Health & Harm Reduction Center.

Deborah Zysman

Deborah Zysman is the executive director of Hawaii Children’s Action Network Speaks!

Latest Comments (0)

These proposals are actually quite reasonable - unlike the eye-popping 16% income tax rate on the upper-middle class promoted by Stanley Chang. At least one refinement is needed, though: step-up in basis should still apply to the primary family residence, regardless of the market value. While I am a renter who lives from paycheck to paycheck, I believe in fairness in taxation - and confiscatory inheritance or property taxes on a primary residence are never fair.

Chiquita · 1 year ago

It would be helpful if you could explain how you come up with the 13% versus 9% numbers. Sounds like you might be comparing wages to capital gains taxes, which isn’t a fair comparison since all capital gains come from investments that have already been taxed as income.Hawaii has the second highest rate of income taxes in the nation, as well as the steepest rate of increase for middle class workers. In particular, #1 California’s highest rates only apply to people earning more than $1M/year, so with our lack of million a year earners, we are probably already the highest taxed state in the nation.You might also remember that we are the only state which taxes all goods and services at each level of production, versus a sales tax. The average consumer good goes through 3 such taxable transactions, making our effective sales tax one of the highest in the nation.Real tax reform to benefit all consumers would reduce GET and other regressive taxes, lower prices, and reduce the bracket cutoffs to effect fewer working class people.

Wylie · 1 year ago

Where did the article find the 13% rate for state and local taxes?  Does it include GET?

CivilSupporter · 1 year ago

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