|
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 22, 2018 Mighty Morphin Power Bills! By Tom Yamachika, President In last week’s article, I said we should look forward to lots of surprises as lawmakers press forward with our legislative session with techniques such as “Gut and Replace” to give our legislative bills content that doesn’t at all resemble what they previously looked like. Here are some that we have seen so far: HB 207, which started off as a bill to adjust the amounts of the low-income household renters’ credit for income tax, is now a bill to increase estate taxes for large taxable estates and increase conveyance taxes paid on the transfer of single-family residential investment properties with a value of at least $2 million. HB 2432, which started off as a bill to impose transient accommodations taxes on “resort fees,” which some hotels charge, still has that content but was also stuffed with provisions increasing the tax rate on timeshare units, and then applying the tax to “intermediaries” such as Expedia or Priceline that sell Hawaii transient accommodations online. SB 648, which started off as a bill to increase income tax credits for the poor and pay for them with an income tax hike, is now a bill that allocates additional transient accommodations tax revenues to our neighbor island counties. At least with the above bills, the committees that gutted and replaced the bills’ contents were good enough to publish a “Proposed Draft” that people could read and testify about before it became the current version of the bill. And then, there is HB 1652. It started out as a housekeeping bill, to get rid of some special funds that weren’t being used, following a State Auditor’s report identifying those funds. The bill remained a housekeeping bill until just recently, when the Senate did two things. First, it added “auto-raid” provisions placing new dollar caps on fourteen different special funds, so that if the special fund has more money at the end of the State fiscal year the excess is dropped into the state general fund. Then, it added a provision that increases by 40% the “central services skim,” a fee that the State sucks out of most special funds and plops into the general fund. This fee is ostensibly for services that the State provides to the fund. The fee is increased from 5% to 7% of the fund’s receipts . We have written about the central services skim in articles published on August 7, 2017, and August 14, 2017. At that time, we wondered about whether the 5% was based on verifiable data or was just another made-up number. We also worried about whether the federal government, which pays a large chunk of the skimmed amount out of the Airport Fund, would push back given that a significant and growing number of special funds are legislatively exempted from the skim, and the Airport Fund isn’t. Here, we have provisions being inserted into the legislative process with literally no notice. No proposed draft with these provisions was published. No testimony or other data justifying either the 5% skim or the 7% revised skim appears in the legislative record. No one could tell lawmakers about possible ramifications, for example, “You better be careful because the 5% skim is grandfathered under the federal laws governing the airports but the 7% won’t be.” The fourteen different constituencies behind each of the fourteen special funds being auto-raided, furthermore, might have had something to say about the raid provisions. But we won’t know because they were never given the chance to testify. Is Mighty Morphin Power Bills a way to make good laws in this State?
0 Comments
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 15, 2018 The Feds Gave You a Break? Now We, the State, Can Turn the Screws? By Tom Yamachika, President It’s not often that State lawmakers express their justification for imposing taxes in terms other than “We need the money to fund essential services and programs.” But how about this? The following language is from an actual bill: "The legislature finds that the federal government has significantly raised the threshold for the federal estate tax. The federal estate tax grants an exemption of $5,490,000 per individual and up to $10,980,000 for a surviving spouse; provided that the surviving spouse elects to use portability of the predeceased spouse's exemption on the predeceased spouse's estate tax return. Estates valued at less than these amounts are exempt from paying federal estate taxes. The recently enacted Public Law No. 115-97, originally introduced in Congress as the Tax Cuts and Jobs Act, doubles the threshold to approximately $11,180,000 and $22,360,000, respectively, and will result in a reduction in federal estate tax revenues. According to Internal Revenue Service data, twenty-one estates in Hawaii paid a total of $23,471,000 in federal estate taxes in 2015. The legislature further finds that these changes to the federal estate tax provide the State with an opportunity to benefit Hawaii residents. By amending Hawaii's estate tax thresholds and rates, the State can capture some of the money that certain residents will no longer be required to pay to the federal government and redirect that money to the State." This, by the way, is from HB 207, Senate Draft 1. As it now exists, the bill would jack up the Hawaii estate tax by adding a new top tax rate of 20% to be applied to taxable estates over $10 million. It would also hike the Hawaii conveyance tax on purchases or sales of condominiums or single-family residences valued at $2 million or more, and there the tax would increase between 66% and 220% depending on the value of the unit being sold. The bill as the House passed it in 2017 looks nothing like the current bill. Surprise, surprise, this bill is another victim of the much-hyped “gut and replace” technique. What does that mean? The only thing about a bill that can’t be changed during its journey through the Legislature is its title, and under the Hawaii Constitution, the contents of a bill must relate to its title. Therefore, if a legislative committee has before it a bill with a broad title like “Relating to Taxation,” it can amend the bill by gutting it and replacing its entire contents with something very different. This bill as the House passed it, for example, was an income tax bill relating to the low-income householder renters’ credit. But because its title is “Relating to Taxation,” the income tax contents can be deleted and replaced with hikes in the estate and conveyance taxes. Now, the Senate adopted some rules that sound like they wanted to curb the “gut and replace” technique. Senate Rule 54(2) says, “The fundamental purpose of any amendment to a bill shall be germane to the fundamental purpose of the bill.” In practice, however, gut-and-replace is still alive and well, and a technique in the playbook of many of the House and Senate committee chairs. So, as our legislative session finally winds down, there will be lots of surprises such as bills previously thought dead being resurrected by incorporating their contents into other bills. It ain’t over till it’s over, folks!  Contact:
Joseph Pluta Vice President/President Emeritus West Maui Taxpayers Association Ph: 808-661-7990 pluta@maui.net PRESS RELEASE-- FOR IMMEDIATE RELEASE April 13, 2018 Lahaina, HI - WMTA ANNOUNCES MAY MEETING for HHARP --- DRAFT OF THE WEST MAUI EMERGENCY PLAN Please be reminded that the next West Maui Community Disaster Planning Meeting Scheduled for Wednesday, May 9, 2018 at the Lahaina Civic Center, 1840 Honoapiilani Hwy, Lahaina at 5:30 p.m. There will be no meeting in April. Speakers will be General Bruce Oliveira, Hawaii State Department of Defense, Community Programs Director, along with Joe Pluta, Vice President/President Emeritus, West Maui Taxpayers Association, and Dennis Terpin, Ph.D, O.H.S.T., FEMA/DHS Certified Master Level Instructor. Together they will lead our upcoming meeting to discuss the Draft of the West Maui Emergency Plan. The West Maui Taxpayers Association (WMTA) is working with the Maui Emergency Management Agency, The Pacific Disaster Center, and the State Emergency Management Agency on developing a customized disaster plan designed to meet West Maui’s specific needs. The isolation from the Island’s major hospital and airport, due to frequent road closures, fires and flooding, have highlighted the need for special preparedness planning – seems that “missile launch” may be added? The Hawaii Hazards Awareness & Resilience Program (HHARP) is a series of monthly workshops, presented by subject-matter experts, to provide education for hazard understanding and offer tools and information resources to guide community mitigation, preparedness, response and recovery planning. These meetings are free and open to the public. The WMTA invites you to join us and be a part of the solution to plans that may well be the reason why lives will be saved when disasters strike. Please put these meetings on your calendar and plan to attend! More Information on WMTA and Disaster Preparedness can be found at www.westmaui.org. ### We are excited to participate in the 40th Annual Maui Hotel & Lodging Association Charity Walk on Saturday, May 12, 2018. Join our team for the walk or donate to support our efforts!
Ways to support WMIF and WMTA in the MHLA Charity Walk (WMIF organization code is 487):
West Maui Improvement Foundation and the West Maui Taxpayers Association continues to serve the West Maui Community. Its mission remains, "To improve the West Maui community by receiving and expending funds for the erection and maintenance of public and community facilities for the overall betterment of public services for West Maui residents and visitors, including enhancements for health and safety improvements." 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 1, 2018 Financial Planning For A $200M Per Year Deficit? By Tom Yamachika, President A recent news release from the Hawaii State Senate Majority Caucus says: The State Senate has drafted, discussed, and voted on SB508, SB2415, SB2484, SB2489, SB2699, and SB2821 that are projected to generate approximately $72 million in revenues based on the Department of Taxation estimates. The current State Financial Plan shows the State is over spending by $208 million this fiscal year, $263.2 million in FY2020, $209.7 million in FY2021, and $105.4 million in FY2022. The additional revenues derived from the Senate bills will be added to the general fund which will allow the State to pay for government services, debts and liabilities, and to reduce financial shortfalls for the next five years. With the Senate voting on the final measures today, combined with the updated January 8th Council of Revenues forecast, the State revenues to the general fund will increase by $114.7M. Here, the Senate Democrats are talking about shoring up the State’s financial plan with $72 million in additional revenues, mostly new or increased taxes. Before we start thinking about how great or wise the Hawaii State Senate is, or isn’t, we need to be asking a few questions. First, why do we have a current state financial plan that spends more than $200 million every year over available revenues? If I were teaching a class in financial planning and someone handed me a financial plan that didn’t balance, I’d hand it back saying, “How can this be called a financial plan?” Is the idea that someone just dropped this financial “plan” on the Legislature’s lap and said to them, “Fix this”? The Hawaii Constitution requires a balanced budget, so doesn’t the submission of a deficit financial plan burden the Legislature with making politically tough decisions—cut programs or services, or raise taxes once again—while the creators of the plan dodge any repercussions from constituents? In the past, the Governor’s Office has responded to financially critical situations with across-the-board spending restrictions. This means any department that receives general funds is required not to spend a certain percentage, perhaps 5% or 10%. Gov. David Ige's administration routinely imposed budget restrictions, even in years when the State had money, such as fiscal 2016 when the State finished up the year with a $1 billion “budget surplus.” Routine use of this kind of device is dangerous. Not only will it motivate government departments to over-budget in response to the anticipated restrictions and rely more on special funds that are not subject to those restrictions (although the State does skim 5% off special funds for a “central services assessment”), but it breeds distrust among other affected parties such as the unions. They, by the way, were visited the month after the “$1 billion surplus” announcement with news that all of the money was gone already, as we have mentioned before. Everyone, cut it out already! Honesty and transparency in government, which we all need, doesn’t call for “financial planning” for a $200 million deficit when a balanced budget is required. It doesn’t call for routine use of across-the-board budget restrictions that take no account of the fiscal priorities we have. And it doesn’t call for fiscal sleight of hand where we say the money is here today and gone tomorrow. The budget is hard enough to understand without any of these gimmicks, so let’s have a real financial plan and honest debate over the fiscal priorities we have as a State. 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 March 25, 2018 The California Stupidity Fund By Tom Yamachika, President One of the changes that was made in the Tax Cuts and Jobs Act of 2017, which applies to our federal tax returns for this year, is a limitation on deductions for state and local tax. Simply put, you can only deduct up to $10,000 in state and local tax. If you paid more, too bad, tough cookies. (This limitation applies only to non-business taxes. If you have a business and it pays taxes, such as our state GET, those taxes are fully deductible.) Some government officials in high-tax states, such as California (which is now one of the only states with a higher income tax rate than ours), were not too happy about the limitation. California is now trying to enact a workaround, and some Hawaii lawmakers are actively considering similar legislation. Specifically, the California Senate has passed a bill that establishes a “California Excellence Fund” that will accept contributions from people. The fund will be used to fund public works and other government projects, and Californians will get an 85% tax credit for amounts contributed to the fund. So, for example, if you owe $85,000 in California tax and you contribute $100,000 to the fund, an $85,000 credit is generated so you no longer owe money to the state. If the taxpayer gets a charitable deduction for the $100,000, the taxpayer would get much more benefits because there is no limit on deductions for giving to charity. Our advice on doing the same thing in Hawaii: three words. It. Doesn’t. Work. The main reason why it doesn’t work is that taxpayers who get a benefit, or something of value, from a charitable donation can only deduct the difference between the money they paid out and the benefit they got in return. That’s why a taxpayer who buys tickets to a benefit dinner for $100, for example, gets a letter from the charity saying that the dinner was $30, so the taxpayer can deduct the $70 difference. In the California Excellence Fund example, the taxpayers who “donated” $100,000 were able to avoid paying $85,000 that was otherwise owed to California. Relief from debt is a benefit to the taxpayer just like the meal in the benefit dinner, so the taxpayers in that example will have a deduction for contributions of $15,000. They don’t owe California tax now, so there is no state tax deduction. They are, in fact, worse off. If they instead paid their tax and gave $15,000 to another charity, they would get a $10,000 state tax deduction and a $15,000 charitable deduction. That way they could write off $25,000 for the same cash outlay. In January, while the California Senate was considering the scheme, some alert reporter asked Treasury Secretary Mnuchin about it when he gave a press briefing on other issues. His reaction: “Ridiculous.” Although we are in the process of selecting a new commissioner of the Internal Revenue Service, whoever it is will report to Mr. Mnuchin. So, it’s probably safe to assume that the IRS will take a dim view of the California Excellence Fund contribution scheme. Given all of that, what do you think about establishing a California Stupidity Fund here in Hawaii? 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 15, 2018 The Feds Gave You a Break? Now We, the State, Can Turn the Screws? By Tom Yamachika, President It’s not often that State lawmakers express their justification for imposing taxes in terms other than “We need the money to fund essential services and programs.” But how about this? The following language is from an actual bill: "The legislature finds that the federal government has significantly raised the threshold for the federal estate tax. The federal estate tax grants an exemption of $5,490,000 per individual and up to $10,980,000 for a surviving spouse; provided that the surviving spouse elects to use portability of the predeceased spouse's exemption on the predeceased spouse's estate tax return. Estates valued at less than these amounts are exempt from paying federal estate taxes. The recently enacted Public Law No. 115-97, originally introduced in Congress as the Tax Cuts and Jobs Act, doubles the threshold to approximately $11,180,000 and $22,360,000, respectively, and will result in a reduction in federal estate tax revenues. According to Internal Revenue Service data, twenty-one estates in Hawaii paid a total of $23,471,000 in federal estate taxes in 2015. The legislature further finds that these changes to the federal estate tax provide the State with an opportunity to benefit Hawaii residents. By amending Hawaii's estate tax thresholds and rates, the State can capture some of the money that certain residents will no longer be required to pay to the federal government and redirect that money to the State." This, by the way, is from HB 207, Senate Draft 1. As it now exists, the bill would jack up the Hawaii estate tax by adding a new top tax rate of 20% to be applied to taxable estates over $10 million. It would also hike the Hawaii conveyance tax on purchases or sales of condominiums or single-family residences valued at $2 million or more, and there the tax would increase between 66% and 220% depending on the value of the unit being sold. The bill as the House passed it in 2017 looks nothing like the current bill. Surprise, surprise, this bill is another victim of the much-hyped “gut and replace” technique. What does that mean? The only thing about a bill that can’t be changed during its journey through the Legislature is its title, and under the Hawaii Constitution, the contents of a bill must relate to its title. Therefore, if a legislative committee has before it a bill with a broad title like “Relating to Taxation,” it can amend the bill by gutting it and replacing its entire contents with something very different. This bill as the House passed it, for example, was an income tax bill relating to the low-income householder renters’ credit. But because its title is “Relating to Taxation,” the income tax contents can be deleted and replaced with hikes in the estate and conveyance taxes. Now, the Senate adopted some rules that sound like they wanted to curb the “gut and replace” technique. Senate Rule 54(2) says, “The fundamental purpose of any amendment to a bill shall be germane to the fundamental purpose of the bill.” In practice, however, gut-and-replace is still alive and well, and a technique in the playbook of many of the House and Senate committee chairs. So, as our legislative session finally winds down, there will be lots of surprises such as bills previously thought dead being resurrected by incorporating their contents into other bills. It ain’t over till it’s over, folks! 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 8, 2018 Can Government Avoid Its Responsibilities With LLCs? By Tom Yamachika, President Do you recognize any of these names: Hiʻilei Aloha LLC, Hiʻipaka LLC, and Hoʻokele Pono LLC? For one thing, all of them have “LLC” in their names. LLC is an abbreviation for Limited Liability Company. A LLC is a legal “person,” something like a corporation but much easier to create and maintain. I could go to our Department of Commerce and Consumer Affairs today, give them a two-page form, and have a newly created LLC in my hands before I left the building. It’s much less effort to create than a kid, and it doesn’t need to be fed every day. The LLCs that we are talking about today are run by “managers,” which is one of the ways LLCs can be managed. Their managers are Kamana’opono Crabbe, Lisa Victor, and David Laeha. These three individuals are the chief executive, chief operating, and chief financial officers, respectively, of the Office of Hawaiian Affairs (OHA). Obviously, the LLCs are related to OHA, and indeed their financial results are included within OHA’s published financial statements. And these LLCs are not financially insignificant. Hi’ipaka LLC was given sole title to the land containing Waimea Valley on Oahu, some 1,875 acres. Now, OHA was born out of the 1978 Constitutional Convention. It's a semi-autonomous department with the State of Hawaii that was established by the Hawaii Constitution and chapter 10 of the Hawaii Revised Statutes. It's a $600 million trust that provides millions in grants every year. It has a trust obligation to help the Native Hawaiian community and advocate on their behalf especially when it comes to health, education, culture, land, governance and economic self-sufficiency. Recently, these LLCs were in the center of controversy. Some members of the public wanted to obtain information about the LLCs’ dealings. The LLC’s attorneys told them to go take a hike, because the laws requiring disclosure of state agency information to the public don’t apply to the LLCs, at least in those attorneys’ minds. On January 31, OHA’s Committee on Resource Management, consisting of publicly elected Trustees, unanimously moved to order its LLC managers to provide the LLCs’ check registers. The full Board of Trustees confirmed the committee’s action on February 7. As of March 7, Free Hawaii TV reported that the LLC documents still had not been turned over. Meaning that someone has been thumbing his nose at the Board of Trustees. Isn’t that a great trick? Suppose you were the head of a state agency that was created by the state constitution, and your agency held title to some land. So you create a LLC with you and your top lieutenants as managers, and you drop some money and some land – like a whole ahupua’a – into the LLC. Then you can thumb your nose at state procurement law, state open records law, and other requirements for state agencies by simply noting that an LLC isn’t a state agency. You can spend money when you want and where you want, and you don’t even have to listen to any of those people in the State Capitol, not even the ones who gave you your job, because they aren’t managers of the LLC. That’s even better than a special fund! My humble reaction? OH MY GOD, YOU MUST’VE FALLEN OFF THE DEEP END! HOW STUPID DO YOU THINK PEOPLE ARE? YOU’D BETTER STOP THIS INSANITY NOW, OR YOU WILL BE IN DEEP DOO-DOO! CAN YOU SAY, “ANKLE SHACKLES”? |
Save the Date
HHARP MONTHLY MEETING
May 9, 2018 (no meeting in April) 5:30 PM Lahaina Civic Center Click here for more Info MHLA CHARITY WALK MAY 12, 2018 Sign up and join us to walk, or make a donation to our campaign Stay tuned for info FIRST Candidates Night JULY 25, 2018 Lahaina Civic Center - Main Hall Stay Tuned for Info CANDIDATES NIGHT OCTOBER 18, 2018 Lahaina Civic Center - Main Hall Stay tuned for info Highlights
WATCH THE 2018 ANNUAL MEETING
Click here WATCH THE LATEST HOT TOPICS MEETING - Click Here Disaster Preparedness Expo 2016 was a success! Click here to view all the presentations Click here for Posts regarding Expo. Categories
All
|
RSS Feed
Powered by
