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Doing The Right Thing By The Taxpayer – Provide Relief

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By Lowell L. Kalapa

The final grains of sand are quickly passing through the legislative hourglass as lawmakers prepare to adjourn the 2006 session, but there is still enough time for conferees to consider providing some sort of tax relief for residents.

While measures that would provide tax relief are ones that were carried over from the 2005 session, they are nonetheless viable vehicles to provide tax relief. Before the session opened last January, many taxpayers told surveyors that the state should just keep the money to make the necessary repairs to classrooms and other educational facilities. Of the more than $600 million surplus forecast for the state general fund, the governor did propose spending nearly half on urgent needs such as school repair and maintenance.

So if one assumes that the other half would have been spent in providing tax relief, one has to ask what will legislators spend that other half on if not tax relief? Well let’s look at some of the proposals that have been discussed in the past few weeks and which are still under consideration by various conference committees.

By far the largest proposal is this idea of setting aside $100 million during the fiscal year and another nearly $100 million in the following four years for a venture capital fund to encourage innovative thinking and innovation partnerships. While being touted as the match that will spark the creation of new jobs, it looks so similar to the action taken by the legislature in 1989 when they set aside $90 million a year in general excise tax revenues to build and maintain educational facilities.

Described by the then chair of the education committee in the senate as the legislature’s commitment to education, lawmakers ended up raiding the fund two years later when general fund receipts took a nose dive. In other words, the educational facilities special fund became nothing more than a way for lawmakers to “bank” those surplus dollars. Since this set aside is established only by law, lawmakers can change the law any old time and take back the funds especially if there aren’t enough general funds to pay for public programs and projects.

Then there is the plethora of tax credit bills still floating around the legislative arena ranging from the 15% – 20% credit for digital media production costs with an $8 million production ceiling on the credit to tax credits for farmers to repair irrigation ditches or purchase their water from a county water system as opposed to purchasing their water from a state irrigation system. Of course, how could lawmakers turn down tax credits for those victims of flooding from the Manoa floods of 2004 to those which occurred over the past month. After all, it is only up to $10,000 per taxpayer. Forget the fact that we never provided such tax credits to the victims of Iniki in 1992 or to those who lost their homes and businesses in Kapoho or from the Hilo tsunami just after statehood. And of course, don’t even think that lawmakers will turn down victims of some even worse disaster in the future.

And we know lawmakers have big hearts and are concerned about all those folks who gave up their jobs so that they could stay home to care for their elderly relatives. They are proposing a $1,000 per caregiver credit and pretty soon that could add up to real money in the millions of dollars. But no, those caregivers are “saving” us taxpayers money because those elderly relatives would otherwise have to be placed in a more expensive care facility and we taxpayers would have to pick up the tab.

But have lawmakers thought about what it means to a poor, single parent family of three who is paying state income taxes on an income that falls below the poverty line? How does that attitude comport with the battle cry for social justice?

While providing relief to some poor family who probably doesn’t have food to put on the table three times a day may not be as sexy as rubbing shoulders with movie stars and television actors or for that matter claiming credit for helping to develop some technological break through, but not providing tax relief, especially to those at the bottom of the income scale, may mean that a child will never have to need one of those promised jobs because he or she may never realize adulthood.

It is downright shameful that lawmakers are so bedazzled with all of these attractive industries that they have forgotten the fact that Hawaii has the third lowest threshold before families start paying state income taxes. Hey, we already know that Hawaii is one of the highest taxed states in the nation, but lawmakers like to ignore that fact, in fact, the like to ignore a lot of facts. After all, dealing with reality is not the most pleasant thing.

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