Danny De Gracia: Want To Help Hawaii Taxpayers? Reconsider The GET - Honolulu Civil Beat

About the Author

Danny de Gracia

Danny de Gracia is a resident of Waipahu, a political scientist and an ordained minister. Opinions are the author's own and do not necessarily reflect Civil Beat's views. You can reach him by email at dgracia@civilbeat.org or follow him on Twitter at @ddg2cb.

When I was still a young committee clerk at the Hawaii House of Representatives in the late 2000s, a friend asked me over lunch at Kincaid’s restaurant what I thought about the idea of either abolishing, or at the minimum, creating a tax holiday from the General Excise Tax.

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At the time, the Beacon Hill Institute for Public Policy Research had created a sales tax calculator that had been specially adapted for Hawaii to calculate what changes in the GET and other local taxes would have on government and the private economy. Showing me the Excel spreadsheet, my friend walked me through various scenarios where the GET rate was reduced incrementally.

The simulation showed that even the slightest reduction in taxes put the state in the red fiscally but also resulted in increasingly bigger gains in private employment and private wages the more the GET was cut.

“The problem with Republicans pitching the Laffer Curve theory is that they argue if we cut taxes, it will cause everyone to make more money, which in turn, will then cause the government to make more tax revenues,” I said to my friend, looking at the numbers. “But in reality, what the computer model seems to suggest is that lower taxes will make government services irrelevant because the private sector will outgrow government, and people can just buy the services they want – if they want it, or only when they need it – through the free market.”

“Correct,” she replied.

I shared the simulator with both Democratic legislators and Republican friends who I knew were running for office. Unfortunately, nearly everyone hated the idea, because they were concerned about the blowback of the state’s general fund going down.

“But it will make all private goods and services more affordable, and every public job lost will be replaced with more private jobs,” I explained to a Democrat. “That’s how you build an economy and improve quality of life.”

Then-Gov. David Ige signed a bill giving tax refunds to Hawaii residents because it was argued even that small amount would help the economy. So why not grant exemptions to the GET and put even more money in the hands of taxpayers. Ku‘u Kauanoe/Civil Beat/2022

The pessimistic response was that the Department of Taxation would testify against any measure that would reduce the general fund. And the question would be raised in committee about whether the cost of reducing the taxes would exceed the benefits.

Fast forward to 2023. Everyone is feeling the pinch of inflation, and Hawaii’s high cost of living and difficult job market already have driven many people off to the mainland forever. I was at Costco in Kapolei last week, and while I was looking at cuts of frozen meat, one shopper passing by exclaimed, “Hooo! Have you seen these prices?”

Things are so bad that it’s now common for Democrats to suggest GET exemptions, at least when they’re trying to get as many votes as possible. Whether that will actually manifest this upcoming session in the form of actual legislation enacted is another matter, but it does demonstrate that if you live long enough, you get to see people change their minds from “never” to “maybe.”

I love attending policy conferences during which both the woke progressive activists and ivory-tower state policymakers are present – you know, the ones that come highly recommended and are always behind everything – and I hear them saying that we need to, at the minimum, take the GET off food and medicine so people can eat and have affordable health care.

I just laugh quietly to myself, because I’m wondering where these same people were when I was a committee clerk and everyone was foaming at the mouth to raise the GET even higher and build all kinds of insane projects so certain individuals could have additional resume bullet points to run for higher office. If that isn’t Orwellian, I don’t know what is.

But let me say this: We really should make it a top priority to help struggling locals save more money. If that means lowering the GET, or creating exemptions for certain products or activities, then we should do it.

Money represents freedom. The more money you have, the freer you are to go wherever you want, do whatever you want or buy whatever you want. Hawaii residents are hard-pressed by expensive costs of living, a nanny government that constantly seeks to micromanage them (while having minimal accountability or competence in service to the taxpayers), and almost no hope of upward mobility. Every dollar that we can help them save is a dollar more toward freedom and happiness.

Robert Kiyosaki in 1997 wrote a bestselling book called “Rich Dad, Poor Dad” that talked about how differences in mindset can produce different prosperity outcomes in life. Someone needs to write a sequel for Hawaii called, “Dad that Max Donated to the Governor, Dad that Didn’t Donate At All” because it feels like we’re living in a palace economy where winners arise not by private innovation, but by government overregulation. That needs to change, and the only way it will is with lower taxes, smaller government and bigger private sector opportunities.

Last year, the Legislature mobilized to give Act 115 refunds in the form of $300 because it was argued even that small amount would help the economy and lighten the load of local taxpayers. If that’s the case, then we should have no problem in 2023 putting even more money in the hands of taxpayers by giving exemptions to the GET.

Give us a chance to save, to invest and to breathe a little, and Hawaii will come roaring back to life.

Read this next:

Chad Blair: Danny Kaleikini's Little-Known Brush With Politics In Hawaii

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About the Author

Danny de Gracia

Danny de Gracia is a resident of Waipahu, a political scientist and an ordained minister. Opinions are the author's own and do not necessarily reflect Civil Beat's views. You can reach him by email at dgracia@civilbeat.org or follow him on Twitter at @ddg2cb.

Latest Comments (0)

If we can replace GET with other revenues, I'm all for it. I don't support carving out exemptions for this or that, because once that starts, the Leg becomes a sewer of businesses begging for exemptions, trading campaign contributions for votes. Keep it simple. Keep it flat. If we want to subsidize people, use tax credits or other avenues.

LarryS · 2 weeks ago

It's extremely unusual to tax food... I think we may be one of the only states that does that because it's so regressive! Time to change Hawaii!

boocats808 · 2 weeks ago

Yes, it's terrible how a nanny government encourages access to health insurance, reduces traffic deaths by requiring the inconvenience of seatbelts, allows schools to teach actual science, provides public education, promotes safety, tries to ensure some level of cleanliness in restaurants, provides potable water rather than having us drill our own wells, builds and sometimes repairs roads, provides the public transportation that allows people without cars to go to work, requires us to drive on the right side of two-way roads and highways, does not allow us to exercise the full capacity of our cars and motorcycles when we want to drive faster than 80 miles per hour, tries to save or rescue us when reckless driving renders us broken, and more. Every time this correspondent uses the term "nanny state," he lets us know which television channel he watches.

irwinhill · 3 weeks ago

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