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Hawaii Biography would like to provide comments on a bill that would create an income tax surcharge for individuals earning more than $5 million annually, or estates and trusts with annual income of more than $200,000.

Although the bill’s language calls it a “surcharge,” it would be more accurate to call it an income tax increase for certain individuals, estates, and trusts.

If passed, this bill would add 5% to the income tax rate for individual filers earning more than $5 million and joint filers earning more than $10 million. The “surcharge” will be 3% for single filers earning more than $12.5 million and joint filers earning more than $25 million. For estates and trusts, an additional 5% applies on income over $200,000 and 3% on income over $500,000.

This income tax increase will give Hawaii the highest income tax rate in the country . It would also accelerate the departure of high-income people to states with lower tax rates.

Hawaii already has the third-highest rate of economic exodus per capita in the country. Researchers have noted a growing trend of economic migration at the state level over the past few years, especially from high-tax states to lower-tax states.

While this trend may start with high earners, it will quickly spread and impact the state as a whole. Along with high-income earners come more business opportunities and new ventures, so professionals and middle-income families will soon follow suit. At the same time, the tax base is reduced, and fewer people have to bear the burden of the state budget.

Essentially, this bill will worsen this problem and accelerate economic flight from Hawaii.

It’s not just that these tax increases are necessary to replenish government coffers. Hawaii is running a budget surplus due to higher-than-expected revenues coupled with an infusion of federal funds.

While the tax increases outlined in this bill may only apply to wealthy individuals, estates, and trusts, they will have a negative impact on Hawaii residents as a whole. The tax hikes proposed here would likely discourage business and discourage investment, exacerbating the unemployment and lack of opportunity that is already forcing many residents to move elsewhere.

The small and speculative increase in revenue that this tax increase might bring would be offset by the damage it would cause to the rest of the state’s economy.

This proposal appears to ignore the reality of our state’s budget surplus and the challenges our businesses and residents have had to face over the past two years. The reality is that there are many reasons why we should be wary of tax increases. Here are just a few:

• Hawaii residents are already among the highest taxed in the country; The state has the second highest overall tax burden in the United States.
• Hawaii can’t handle tax hikes as its already battered economy has been hit harder by lockdowns than any other state in the country.
• Hawaii’s population has declined by 32,237 people since fiscal year 2016. left Hawaii’s remaining taxpayers with a larger tax burden.
• Hawaii has a progressive income tax that taxes high income earners at 11%, second only to California at 13.3%. 
• Hawaii’s top 1% already pays 23% of all income taxes in the state.

The rationale for a tax on the rich is that such funds will be used in programs to help the less fortunate. However, a wealth tax, especially one that can be avoided by relocating, is unlikely to provide much benefit to the rest of Hawaii’s residents.

If Hawaii’s lawmakers want to help working families, they should abandon their reliance on taxes as a public policy tool that has succeeded only in making Hawaii the state with the highest cost of living.

Instead of trying to solve the state’s economic problems with a tax on the “rich,” lawmakers should focus on strategies to reduce the cost of living, such as lowering income taxes, exempting the general excise tax on groceries and health care services, lowering fees, and relaxing regulations that limit opportunities and hinder economic growth.

Hawaii Biography – Life and Business in Hawaii Our motto is: “E hana kākou” . In Hawaiian it means “Let’s work together .  “

Unfortunately, politics in Hawaii can be messy, and too often good people fight in the mud while ordinary people continue to struggle.

That’s why we value a non-partisan group with supporters from different ideologies. It is thanks to the collaboration of all these people that we were able to achieve a lot of good things, despite the abundance of bad policies.

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