Saturday, July 20, 2024
Hawai'i Free Press

Current Articles | Archives

Sunday, June 22, 2014
How Hawaii Can Grow the Pie
By Tom Yamachika @ 3:10 PM :: 4205 Views :: Taxes

How Hawaii Can Grow the Pie

What it would take to help the state create a governing and regulatory climate that would bring in more revenue without raising taxes.

by Tom Yamachika, Tax Foundation of Hawaii, June 22, 2014

On occasion I’ve testified on tax bills before our legislature. This past session, there were many tax expenditure proposals to allow credits and incentives to select groups or specific activities. I said that whenever credits and incentives take away revenue, that money needs to be made up – usually by the rest of us.

“Not so,” the department of business, economic development & tourism (DBEDT) testified. “We can make up the revenue by simply growing the tax base.”

Theoretically, DBEDT’s premise is true.

If we stimulate business so it produces more revenue and pays more tax, then the revenue lost to the incentives can be made up.

But imagine going to your friendly neighborhood money lender about your delinquent loan payment and saying, “Don’t worry. I’ll get a job that pays 30 percent more than my current one and pay off your loan!”

The response, of course, is likely to be, “Fine, but you still need to pay your bill now!”

We may be able to grow the pie ultimately, but it’s a process that takes time. And someone has to pay the current bills while we wait for the pie to grow.

Nevertheless, growing the pie is a worthwhile goal. How do we get there?

As a way of getting to the answer, suppose we focus on the manufacturing sector, which was identified by the Chamber of Commerce this past legislative session as one especially worthy of assistance.

A recent survey conducted by the magazine IndustryWeek and the National Association of Manufacturers noted that the top business challenges continue to be rising health care costs and an unfavorable business climate.

When asked about policy priorities for the next few years, slowing entitlement spending, finding a long-term budget deal, reducing regulatory burdens and controlling health care costs were at the top of the list. One survey respondent had an interesting observation that seemed to capture the mood:

“We need less Democrats and less Republicans and more smart people that are willing to tackle the longer-term issues with compromise. Not as a bulldozer and not with BS, but something that all Americans can believe in and actually trust.”

Similarly, Hawaii should strive for a government or regulatory environment that people can believe in and trust. To do that, I recommend that we stick to the basics: Enact laws and rules that are clear and easily understood. Don’t use vague or misleading language.

It’s okay to use specialized concepts from other areas such as federal law or regulatory law because it can be really difficult to define your own concepts. For example, many of the credit bills this past session awarded credits based on “cost” but failed to define “cost.” How about using “depreciable basis,” which is a complex but well-known tax concept?

Don’t change the rules in the middle of the game, or even give the appearance that the rules are changing. If a law is vague and some taxpayers seem to be taking liberties with it, there is a great temptation to clamp down and make life harder for everyone. But that can defeat legitimate expectations, fuel distrust, and give the impression that the state was engaging in “bait and switch” from the start.

Be true to legislative intent. Advocates in both the public and the private sectors try to convince lawmakers and agencies to apply a law in areas it wasn’t intended for. We should resist the temptation and be true to the interpretation that addresses what the law sought to address and stop there.

Once we have created an environment that we can believe in and trust, we would have eliminated one of the barriers that is keeping us from being internationally competitive and improve our chances of actually growing the pie.

---30---

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

Aloha Pregnancy Care Center

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii Military History

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Together

HiFiCo

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

July 4 in Hawaii

Land and Power in Hawaii

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

MentalIllnessPolicy.org

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Parents Org Hawaii

NFIB Hawaii News

NRA-ILA Hawaii

Obookiah

OHA Lies

Opt Out Today

Patients Rights Council Hawaii

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

RailRipoff.com

Rental by Owner Awareness Assn

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

School Choice in Hawaii

SenatorFong.com

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii