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WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers To view the archives of the Tax Foundation of Hawaii's commentary click here. Weekly Commentary For the Week of April 14, 2019  Blankety Blank By Tom Yamachika, President The story you are about to read is true. The names have not been changed to protect the innocent. This is the city: Honolulu, Hawaii. I live here. I’m a doggie. The suspect is Blankety Blank. No, that isn’t a cuss word. It’s just the facts, ma’am. Blankety Blank is House Bill 1190. Its purpose, should you decide to accept it, is “to amend state income tax rates and provide tax relief for taxpayers whose income places them at or below the poverty level.” But here’s what the bill actually says (for married filing jointly, with other filing statuses having similar language): In the case of any taxable year beginning after December 31, 2018: If the taxable income is: The tax shall be: Over $6,600 but not over $9,600 ___% of excess over $6,600 Over $9,600 but not over $28,800 $___ plus ___% of excess over $9,600 Over $28,800 but not over $38,400 $___ plus ___% of excess over $28,800 Over $38,400 but not over $48,000 $___ plus ___% of excess over $38,400 Over $48,000 but not over $72,000 $___ plus ___% of excess over $48,000 The list goes on, but I’m sure you get the idea. Blanks, blanks, and more blanks. We don’t know if it’s a tax cut, a tax hike, or something in between. Nevertheless, the bill has oodles of supporters, including the LGBT Caucus of the Democratic Party of Hawaii, Rainbow Family 808, Americans for Democratic Action Hawaii, Hawaiian Community Assets, Hawaii Appleseed Center for Law and Economic Justice, League of Women Voters of Hawaii, Oahu County Democrats, and numerous individuals. We wonder if all those supporters were aware that they were supporting Blankety Blank. Maybe they believed the statements about the bill’s intent, or maybe they just didn’t care about what was in the blanks. Blankety Blank passed the House on March 5th with no one voting “No” and no one voting “Aye with reservations.” The Senate Ways and Means Committee amended it slightly (but didn’t fill in any of the blanks) and passed it out with no dissent on March 29. At this writing, it was awaiting third reading in the Senate, after which it will go to a conference committee. The conference committee conducts its deliberations behind the scenes, and only schedules public meetings when it comes time to vote on the conference draft. The conference draft, if one is produced, will have the real numbers in it. Once that draft is released to the public, we will finally know whether we are looking at a tax hike, a tax cut, or something revenue neutral. The Hawaii Constitution states: “No bill shall become law unless it shall pass three readings in each house on separate days.” The Proceedings of the Constitutional Convention of 1950 said that those readings provide “the opportunity for full debate in the open before committees and in each House, during the course of which the purposes of the measures, and their meaning, scope, and probable effect, and the validity of the alleged facts and arguments given in their support can be fully examined, and if false or unsound, can be exposed, before any action of consequence is taken thereon.” So how do you discuss a Blankety Blank? Can you really debate the measure’s purpose, meaning, scope, or probable effect without knowing whether you are talking about a tax hike or a tax cut? This is a true story. The end of the story has not yet been written. We too will be following House Bill 1190 and will bark like crazy if something goes awry. Ours is a tough job but someone has to do it. The name’s Watch Doggie.
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With the Assessment Property Values increasing over prior year, keeping the rates the same will in fact and effect be a property Tax increase already. Seems too often that the Maui Government officials do not understand that and when they increase the rates as well, they are compounding the net increase much more than they considered. The WMTA intends to make that point clear in our testimony regarding rates, to hold the line as that will already provide the County with significantly more income. We do not know what that exact amount of increase would be pending appeals and hope that a good number will be available to the Council and Administration to know prior to setting any new rate increases.   WMTA Shares these commentaries, without taking a position unless otherwise noted, to bring information to our readers To view the archives of the Tax Foundation of Hawaii's commentary click here. Weekly Commentary For the Week of April 7, 2019  Revenue Raisers Already Sent to the Governor By Tom Yamachika, President We’ve previously warned that our legislature has a dogged focus on new taxes – “ARF! Don’t make fun of me like that!” It’s the Hawaii State Tax Watch Doggie, with a report on recent bills! Q: What would you like to report? A: Our Legislature is wasting no time pushing those revenue raisers! A couple of them cleared the legislative process already and were sent to the Governor’s desk on March 20th. Q: What does that mean? A: When a bill is sent to the Governor during session, he needs to decide whether to sign or veto the bill within 10 days rather than the usual 45. So, bills could become law much earlier than June or July when most bills are approved. Q: What else has gone up to the Governor’s office already? I wrote about SB 94 last week which would try to force presidential candidates to post their tax returns, and I know that’s gone upstairs. A: SB 1361 would raise estate taxes on Hawaii estates valued at over $10 million. It would apply a top tax rate of 20%. That would make us tied with Washington state as the highest state estate tax rate in the country. Q: We want to be top dog that much? A: (Facepaw) I’ll forget you said that. I guess they really want to soak the rich folks who die here. That’s dangerous. You need to remember that these folks easily can jump on a plane and be out of here. According to the Census Bureau we lost more than 10,000 people a year to the mainland for the last three years. Q: Voting with their feet, I guess. A: Then, there is SB 396, relating to marketplace facilitators. Q: What’s that all about? A: The state has tried really hard to go after online sellers like Amazon, Wayfair, and Overstock. Previously those sellers could offer products to Hawaii customers without paying Hawaii tax, and that gave them an advantage over local stores. Last year, following a state-friendly U.S. Supreme Court ruling, our state adopted a law requiring many of those businesses to register and pay tax. Q: So there was a problem with that? A: The online sellers also set up “marketplaces.” Under that system they said they weren’t selling their own products, but were selling on behalf of other stores like Dan’s Dog Food in Plano, Texas. So the marketplace said Dan’s Dog Food isn’t registered or paying tax in Hawaii, so the marketplace had no responsibility to collect or pay GET. Amazon, for example, was only paying tax on about half of its sales because the other half was marketplace sales. Q: Why Dan’s Dog Food? A: I’m hungry. Q: So SB 396 will change this? A: Yes. It says that if an online marketplace collects money on a sale to Hawaii, the marketplace needs to pay GET as the retailer. The business on whose behalf the marketplace is selling is treated as selling its goods to the marketplace. Q: So the marketplace pays 4%, and Dan’s Dog Food would pay the half-percent wholesale rate GET. A: Yes. I don’t know if Dan’s will actually pay, but that’s the theory. And the marketplace facilitators that don’t handle money will be required to report all of their Hawaii sales, with names and addresses of the buyers, to our tax office. Q: Anything else on its way to the Gov’s desk? A: Not right now, but we’ll keep you informed! Woof! |
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