Hawaii's historic tax cut must be protected not because we want it, but because we need it

by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii

It always amazes me when I hear people criticize the historic personal state income tax cut that our Legislature and Gov. Josh Green enacted into law this year.

Finally, Hawaii’s lawmakers listened to the people and did the most effective thing they could to significantly lower our incredibly high cost of living: They decided to let us keep more of our own money.

Yet, we hear from naysayers who claim the state can’t “afford” the tax cut, and suggest that it should be rolled back or offset by tax increases.

Meanwhile, if you’ve been paying attention to the way prices have been rising in our state, you know that tax increases are the last thing we need.

Just last month, the Congressional Joint Economic Committee released its updated state-by-state inflation analysis, and according to its calculations, the average Hawaii household now spends $1,234 more per month to buy the same goods and services as it did in January 2021, for a total of $33,365.

For individual Hawaii households, that equates to $183 more per month on food, $279 more a month for housing, $137 a month for energy and $284 more per month for transportation.

What does this mean? It means that Hawaii’s 2024 state income tax cut came at the right time to help us offset the runaway inflation that has made the past few years so difficult for working families.

Put another way, it’s not that we wanted a significant tax cut. Rather, it’s that we needed it.

If you would like to see exactly how much you might benefit from the cut, check out the Grassroot Institute of Hawaii’s tax cut calculator. Basically, a married couple with one dependent making $83,102 a year is going to see their state income tax decrease by 74% by 2031, saving $19,109 over that period. The tax savings won’t negate inflation completely, but it will give us a bit more breathing room.

It is true that we could do more to lower the cost of living in our state, and I support policies aimed at increasing economic freedom and making Hawaii more prosperous. That includes this year’s state personal income tax cut, which, by the way, was supported unanimously by every state legislator.

Politicians who now say they voted for the cuts “with reservations” are of course free to try to reverse the tax cuts and make Hawaii even more expensive. However, as president of the Grassroot Institute, I will do all I can to protect the progress we’ve already made while advancing new policies that will help our people, communities and businesses thrive.

E hana kākou! (Let's work together!)