Should We Lower Taxes?

by Tom Yamachika, President, Tax Foundation Hawaii

The Hawaii State Tax Watch Doggie told me that he can convince me that tax cuts for everyone, such as some of the bold cuts that Governor Green is proposing, are not advisable for us today.  (Actually, he can’t really talk, but he can type on my keyboard, and if I get in his way he’ll bite me on the schnozzola.)

“The only reason why tax cuts are being proposed is that we have a budget surplus.  Surpluses aren’t forever.  They’ll go away in a year or two.”

But the State has recurring revenue, namely taxes. If we only spend what we take in and no more, we won’t have to eat into the surplus. We have a bigger problem with working families being unable to make ends meet. Even the most recent census numbers show that we are losing people, and the national Tax Foundation has observed that low-tax states are where many people are going. What are we going to do if government spends more and there are fewer people to share the cost?  

“But even you would admit we have current needs.  Roads and bridges, for example.  Our airports.  Deferred maintenance at schools and universities.  How are we supposed to fund those if we’re cutting taxes permanently?”

Maybe that’s a good argument for spending some of the surplus, to make up for disastrous planning decisions made in the past when we didn’t have money.  But in any event we have a large number of people who can’t make ends meet, which shows us that something is very wrong with the system we have now. 

“Shouldn’t all or a large part of this manna from heaven go to our hard-working state employees who have been chronically underpaid, our teachers for example?  We have been asking them to tighten their belts for so many years now, and now we have some funds available to help make up for their past suffering.”

We’ve been asking most of our population to tighten their belts and put up with tax increases.  Isn’t it time to give them broad relief as well?  By the way, state employees are taxpayers too, so relief for all or most taxpayers should benefit them too. 

“Look, we already give relief to our poorest residents.  They have a GET exemption for food bought through the WIC program or other public assistance. And they have income tax credits, several different kinds. Are you seriously suggesting that we cut taxes on the wealthy, who clearly can afford to pay our current taxes?”  

What I am suggesting is that relief be given to those between ‘our poorest residents’ and ‘the wealthy.’  Many of these folks are working two or three jobs and are barely getting by.  I don’t think you can call those folks wealthy (although they might be considered that in other states where the cost of living is much lower).  And, when it comes to thinking about those who ‘clearly can afford to pay our current taxes,’ you need to remember that when they are fed up with our tax and business environment, many of them are able to do something about it like buy a one-way plane ticket to the Midwest, Texas, Florida, or the Carolinas perhaps.  Many of our local nonprofits and news media have been collecting stories about people who have done just that.  Here’s a story from the Grassroot Institute, for example.

Well, after reading this, who do you think had the better of the argument?  If you have an opinion on the issue, you might want to consider letting your legislators, such as your state representative, state senator, or county council member, know where you stand.  They’re supposed to be working for us, by the way, not the other way around, so they should be listening to their constituents.