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Supporting Education with Your Income Tax Return

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By Lowell L. Kalapa

As you stuff that state income tax return into the envelope this week and dream about your refund – if you are indeed going to get one – consider the fact that in the future you might be writing a check to pay your income tax.

That scenario might be more real than you can imagine given the Senate President’s recent proposal to give the Board of Education the power to levy the state income tax and possibly a brand new retail sales tax. Since the Board and education officials already are on record as saying that they need more money to improve the education system here in Hawaii, there is no doubt that the Board will take every opportunity to raise tax rates to generate more money to spend on education. And why not? After all, they claim, the public has said that they would be willing to pay more for education.

And that seems to be the impetus behind the Senate President’s proposal. Apparently, after failing in an attempt to raise the general excise tax and earmarking the funds for education, the new response is to let the Board of Education try and raise taxes so that more can be spent on education.

Unfortunately, that is an ill-conceived response to the problems which plague the department of education. Instead of accountability for education, there will be a lack of accountability for the tax burden in Hawaii. The buck will be passed back and forth from the state legislature to the Board of Education, when questions or complaints are raised about how high the burden of taxes is in Hawaii. The Board will argue that they have every legitimate excuse to raise tax rates because it is going to pay for education. The legislature will argue that there are other vital services that the community needs and therefore they have every justification for raising the general excise tax. Caught in the middle will be the taxpayer who has to pay those taxes.

What is even more surprising about this proposal is the idea that lawmakers would be willing to give up their control over the income tax. This would mean that they would not be able to provide tax relief based on a taxpayer’s ability to pay taxes as measured by the taxpayer’s income. Nor would they be able to propose tax credits, exemptions and deductions. Lawmakers also would not be able to provide tax relief by lowering tax rates or treating certain types of income, like capital gains, with preferable rates. No more tax incentives for high technology, laptop computers, breast-feeding and the like.

And what about the Board of Education? What expertise will they have to decide if income of reservists should be taxed or for that matter, whether a tax credit should be given to offset the 4% tax imposed on food and other necessities? Will members of the Board of Education care about the impact of the income tax on the economy?

The Superintendent argues that more than half of the 1,500 school districts across the mainland have such taxing power. What he fails to note is the taxing power more often than not is the power to tax real property. As a result, there is a much greater alignment of school district needs to the real property taxpayer because it concerns the school in the backyards of their homes for which they have to pay the property tax. The result is that the school operations are given much closer scrutiny than one would give if it was the income tax that was going to pay for the school way on the other side of the state.

So what is driving this proposal? It is the frustration by lawmakers that those who sit on the Board don’t have to be responsible for raising the money. As a result, they can make unlimited requests for funding knowing well that there are only limited resources. When the money can’t be found and therefore appropriated, the Board points its finger at the legislature saying it’s not their fault that the education system is so poor, it’s because the legislature didn’t appropriate enough money.

So the finger pointing goes back and forth and no one takes responsibility. In the meantime, the quality of education suffers. However, giving the Board of Education the power to tax is not going to solve the problem. Much as we like to elect our officials, in this case, an elected Board has done more to destroy the educational system than better it. It is time to reconsider appointing the Board of Education and holding the appointing authority responsible.

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