No Hanahana, Kaukau Anyway

by Tom Yamachika, President, Tax Foundation Hawaii

Growing up in these islands, I always heard the part-Hawaiian proverb that describes a very simple work ethic: “No hanahana, no kaukau.” Meaning: if you don’t work, you don’t eat.

Recently, some very notable people including Mark Zuckerberg of Facebook have been championing the idea of “universal basic income,” which basically is a payment from the government to individuals simply for being alive.

Our Legislature latched onto that idea, passing House Concurrent Resolution 89. That resolution says that universal basic income “is analogous to providing social security to every citizen at a level sufficient to cover their basic needs.” It “would allow individuals seeking job retraining or working part-time to maintain a basic standard of living,” and “would also allow more people to share part time work between the fewer number of jobs that may be available, while lifting burdens on businesses, and providing a more secure and substantial safety net for all people, ending extreme financial poverty, and providing for a more financially sustainable and equitable future for all citizens in spite of coming economic disruption.” It asks two of our government agencies to get together a working group to study the issue and come up with a report, including proposed legislation.

In other words: No hanahana, kaukau anyway.

My advice is to keep two things in mind.

One: How do we pay for it? If we are talking about $10,000 per resident per year, for example, with a million people in our state we are looking at a price tag of $10 billion. That amount would fund Honolulu rail in one year rather than the 30 years or so that taxpayers are now on the hook for. And we would need to pay that every year. For those who think the answer is to soak the rich, we just signed into law a bill that gives us the second-highest maximum income tax rate in the country. Are we seriously thinking of going to that well again?

Two: If you build it, they will come. Whatever becomes of Hawaii v. Trump and the other court cases challenging immigration policy, U.S. nationals have a constitutional right to travel between states. If we dole out copious amounts of cash to each resident, we will magically find more and more new residents. We also will find that it is not legal to exclude them from the distribution. Alaska has a Permanent Fund built up with taxes on oil extraction, and tried distributing it to residents based on how long they’ve lived in Alaska. Its system got shot down by the U.S. Supreme Court. Now Alaska makes Permanent Fund payments to everyone who has lived there a year.

How did most of us non-Hawaiians get to Hawaii in the first place? Folks in other countries saw the United States as the land flowing with milk and honey, and were willing to come here and work hard in the plantations and elsewhere. These immigrants were ancestors to most of us. Some of us may be immigrants ourselves. And now we are talking about making a land where you don’t even need to work to make money. Go back to Point One again, because we are going to have cost overruns.

Rep. Chris Lee, credited as being the “brains” behind HCR 89, is quoted as saying: “Pursuing hard work enough to make a decent living no longer applies in an economy in which automation and innovation have taken that away from so many people.” Hawai`i statewide annual average employment for the calendar year 2015 was 637,813, a 14.5% increase over the 557,041 in 2001, according to DLIR statistics. That doesn’t look like our labor force is tanking because of the automation and innovation that have taken place over the last 15 years. That flawed premise is no justification for adding universal basic income to the social programs and tax credits we already have (including a few we just extended with the income tax hike bill just signed into law).