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Insulting Taxpayers With Tax Relief

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By Lowell L. Kalapa

While the focus in the past couple of months has been on the contested primary races within the established partisan camps, the spotlight will now turn on those races where opposing partisan philosophies and strategies will be debated . . . or at least we would hope. 

If, in fact, this year’s races come down to nothing more than which candidate has the more familiar name or which candidate had the most people out waving signs on the street corner or which candidate walked the district the most times, then all will have been lost for yet another election cycle. This is because most incumbents voted to increase the burden borne by Hawaii taxpayers. What you say? The incumbent candidates tell us that they are responsible for a reduction in income taxes, beginning in 1998 when they adopted the recommendations of the Economic Revitalization Task Force otherwise known as the ERTF. 

They will tell you that they lowered the top tax rate from 10% to 8.25% and increased the income tax brackets so that the top tax rate kicked in at a level twice as much as it did prior to 1998. Of course, they will hope that you will forget that it took four years for taxpayers to realize the full effect of those actions they took in 1998. That’s because lawmakers were unwilling to reduce spending, cut programs, or set priorities. 

This year, incumbent lawmakers will tell you that they provided more tax relief by increasing the standard deduction to 40% of the federal standard deduction and broadened the income tax brackets by 20%. Of course, what they won’t tell you is that they based the amount of the standard deduction on 40% of the amount provided by the federal law for the 2005 tax year. Ah, but the best part is that the “tax relief” won’t kick in until January 1 of next year. It is not like the changes could not have been made effective for the current year, but obviously lawmakers were not willing to give up the last few dollars they could squeeze out of residents this year. This is in light of the fact that the state ended the 2006 fiscal year with a substantial surplus and that revenues continue to roll in at an even more dizzying pace. 

Of course, lawmakers are not willing to tell you that they have managed to chip away at your pocket book with subtle increases in this and that fee otherwise known as the new tax of the 1990’s when lawmakers found it easier to hit up taxpayers for fees rather than increase taxes. For example, did you notice that your motor vehicle registration bill has increased substantially? One reason is that there is another $5 fee for emergency medical services and it would have gone up another $5 for trauma centers had not cooler heads prevailed this year. 

Of course, don’t forget how lawmakers stole fuel taxes from the state highway fund to underwrite a variety of programs that had nothing to do with repairing or building roads. In fact, over a period of eight years during the 1990’s, lawmakers took more than $150 million in taxes you pay on the gasoline you put in your car to fund general fund programs and services. 

The irony of it all is that as gasoline prices soared, lawmakers wanted to “help” the poor consumer who was being ripped off by the big oil companies by slapping a cap on the price of gasoline. And when that didn’t control the rise in gas prices, they wanted to reduce, if not eliminate, the state gas tax. Of course, lawmakers didn’t seem to realize that without gas taxes, there would be no revenues to fix those potholes in the roads. Nor would they recognize that they had already “stolen” all that money from the state highway fund. 

Finally, while lawmakers profess that they want to reduce the heavy tax burden borne by Hawaii residents, they make it almost impossible to do so. If not spending money on more programs and services, they spend it out the back door with the adoption of tax credits that favor only a handful of taxpayers. There are tax credits for building an aquarium, tax credits for films, commercials and other digital productions, tax credits for high technology activities and venture capital, tax credits to build ethanol production plants, all of which will drain millions of tax dollars from the state treasury paid for by the average taxpayer. 

Meanwhile, taxpayers struggle with the heavy tax burden that has made Hawaii infamous as a poor place to do business, a difficult place to cope with the high cost of living, and a poor place to make an investment. 

Ah, but in a few weeks, taxpayers will have an opportunity to do something about changing this picture. However, real change can only happen if the voter is fully informed. So rather than voting for the familiar face or name, do some homework and determine whether or not your elected official has done the best for you.

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