“HI-est” Taxation in the Nation

With the tax increases passed by this year’s Legislature, Hawaii now has the highest tax rates in the nation!  I voted against the multiple tax increases, and voted to uphold Governor Linda Lingle’s vetoes of these fiscally imprudent bills.  Unfortunately, Majority members of the Legislature overrode the Governor’s vetoes.

New tax increases I opposed:

Senate Bill 1111 raises the transient accommodations tax, making Hawaii a more expensive visitor destination. Tourism arrivals are down by double digits. According to the 2008 Room Taxes and Economic Impact of the Lodging Industry, for every one percentage point increase in the tax, 3,200 jobs would be lost. I could not support the loss of 6,400 jobs over the next two years and the blind faith that tourists will come back no matter how expensive Hawaii gets.

House Bill 1747 would increase taxes for approximately 6,000 sole proprietors and 21,000 small businesses. Creating the highest personal income tax rate in the nation, House Bill 1747 takes $48.3 million away from over 21,000 employers in this state on an annual basis. This kind of loss will force small businesses to lay employees off, further taxing the social services of the state. That’s not the kind of logic I can support.

I also opposed the veto override of House Bill 1741, which increases the conveyance tax and redistributes moneys away from the Natural Area Reserve Fund and the Rental Housing Trust Fund. Besides driving up the price for commercial property transactions, and reducing the amount of construction work, diverting money away from preserving our natural areas and development of affordable housing and rentals is not good policy.

Also, Senate Bill 199 restricted the Act 221 high tech tax credits to the point of rendering it ineffective in fulfilling its primary purpose: drawing out-of-state investment capital to fund our high tech industry.  According to the Department of Taxation, for a “cost” of $431.6 million, over $1.2 billion was invested in Hawaii high tech companies, and over $1.4 billion was expended by Hawaii high tech companies in state, over a 3:1 ratio for every dollar of tax credit. This restriction, which I oppose, inhibits the development of a healthy, balanced economy in Hawaii.

Representative Cynthia Thielen • State Capitol, Room 443 • 415 South Beretania Street • Honolulu, Hawaii 96813 • Phone: (808) 586-6480