A SUBSTANTIAL TAX INCREASE WILL HURT HAWAII IN THE LONG RUN

News Release from House Republican Caucus, March 12, 2021

HONOLULU – The House Republican Caucus unanimously opposes Senate Bill 56, which would increase Hawaii's income tax to the highest for the state's top earners and make Hawaii the most taxed state in the nation.

SB 56, which crossed over to the State House of Representatives today, passed in the Senate on a vote of 24-1. 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. Currently, the income brackets are taxed at 11%.

"I can think of no worse timing than now, to tell our residents that if you have ambitions to become a Doctor, a Lawyer, or an Engineer that we are going to tax you more to do so," says State House Minority Leader Val Okimoto (R-36 Mililani Mauka, Mililani Mauka, Waipio Acres). "We should be incentivizing our residents to seek high quality-high paying jobs here at home, not encourage them to move away."

California imposes a tax of 13.3% on those earning more than $1 million and currently has the highest income tax in the country. If this bill becomes law, Hawaii will now impose the highest state income tax on its residents.

This legislation not only increases the percentage to be the highest in the nation it also has a lower income threshold at $200,000 which means more residents will be burdened with this tax increase.

This bill will ultimately impact those middle class craftsmen and skilled laborers, who, through working physically demanding jobs and long hours, have been able to support and raise a family thus far. This increase in taxes will destroy their businesses and further decimate the economy.

"This bill comes on the heels of a year with unprecedented layoffs, salary reductions, and the permanent closures of our local businesses,” states State House Minority Floor Leader Lauren Matsumoto (R-45 Schofield, Mokuleia, Waialua, Kunia, Waipio Acres, Mililani). In times of economic shortfalls, we must seek long-term economic diversification, not implement the highest tax rate in the nation." 

"It's going to discourage economic growth that has already stalled at a time when Hawaii needs job creation the most," says Rep. Gene Ward (R-17 Hawaii Kai, Kalama Valley). "Business owners are sensitive to state income tax rates. They won't bring business here if it's expensive to do so."

The proposed legislation also includes capital gains tax, corporate tax and taxes on high-end real estate deals.

"With the announcement today by Governor Ige that furloughs and layoffs for state workers are no longer necessary, I don't see any reason to continue considering this," says Rep. Bob McDermott (R-40 Ewa, Ewa Beach, Ewa by Gentry, Iroquois Point). "These types of tax increases are short sighted and debilitating."