Saturday, December 4, 2021
Hawai'i Free Press

Current Articles | Archives

Monday, March 22, 2021
SB56 tax scare could have long-lasting effect
By Grassroot Institute @ 10:02 PM :: 1419 Views :: Health Care, Taxes

SB56 tax scare could have long-lasting effect

by Joe Kent, Grassroot Institute, March 21, 2021

Hawaii residents were spooked last week by Senate passage of a bill that would increase the state’s highest personal income tax from 11% to 16% on annual incomes of more than $200,000, making it the highest in the nation.

Promoted as a way to help balance the state’s budget, the now-notorious SB56 also would increase the state’s capital gains tax, corporate income tax and conveyance tax, and “temporarily” repeal a large number of general excise tax exemptions.

Thankfully, the word from House leaders is that the bill is probably dead — at least for this year. The bill has been referred to four separate committees, all of which must hold hearings and approve it for the bill to survive.

But even if the bill is functionally dead at the moment, it still is shocking that such a bill made it out of the Senate — by a vote of 24-1, no less — and could return next year. At a time when many Hawaii residents still are nursing their wounds from the economic devastation caused by the COVID-19 lockdowns, our senators do not seem to know that:

>> Hawaii already has the second-highest tax burden in the nation.

>> Hawaii has been harder hit by the lockdowns than any other state in the nation, forcing thousands of businesses to close and pushing unemployment to the highest rate in the nation.

>> State lawmakers increased taxes and fees substantially in the decade before the lockdowns.

>> Hawaii businesses will be seeing their state unemployment taxes go up by average 38% in 2021, leaving them little, if any, room to handle more taxes.

>> Hawaii has been experiencing net population loss in recent years because of its high cost of living, further eroding the state’s tax base as well.

As The Wall Street Journal’s editorial board wrote last week, “If the Hawaii Legislature’s goal is to shrink the state population, its new tax grab might do it.” Already some entrepreneurs and doctors have notified the Grassroot Institute of Hawaii that they are considering leaving the state.

Dr. Scott Grosskreutz, of the Hawaii Physician Shortage Crisis Task Force, said SB56 has pushed many physicians into thinking seriously about relocating to the mainland. He added that for four years, doctors have been lobbying the Legislature for a medical services exemption from the state general excise tax. But what did they get? Possibly the worst Hawaii tax bill in decades.

The state’s propensity to “tax to da max” also likely will discourage doctors moving here in the first place. Grosskreutz said most new physicians won’t want to move to a state with such high taxation while still dealing with their student loans and the overhead costs of setting up a practice.

The fact is, SB56 is a Pandora’s box of tax hikes that already has waved a red flag to entrepreneurs across the nation that Hawaii is not a good place for business. If you were a potential investor on the mainland and saw headline, “Hawaii lawmakers considering nation’s highest income tax,” what would you think?

Overall, it is doubtful any of Hawaii’s proposed tax increases this year will, if enacted, achieve the goal of increasing state revenues. More likely, they will further damage the economy and prompt even more of our family, friends and neighbors to move away.

If our lawmakers really want to generate more tax revenues, they should stop playing with fire and instead focus on growing the economy. They need to cut government spending, lower tax rates, and remove barriers to commerce and employment. The result would be more investment, more business activity and more jobs, and thus more tax revenues to help balance the state budget, which, after all, is the goal of SB56.


(This commentary was originally published in the March 20, 2021, edition of Hawaii Filipino Chronicle.)


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


808 Silent Majority

ACA Signups Hawaii

Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni


Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Back da Blue Hawaii

Ballotpedia Hawaii

Better Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii


Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Life Alliance

Hawaii March for Life

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together



Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport


OHA Lies

Opt Out Today

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii


Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

Sink the Jones Act

Statehood for Guam

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii