State Tax Filing Deadlines Extended
By Tom Yamachika, President

The Hawaii Department of Taxation has issued Announcement 2020-01, "Relief for Taxpayers Affected by the COVID-19 Emergency."  The Announcement says that if you have an income tax return or payment for the year 2019 that is due between April 20, 2020 and June 20, 2020, then your return, payment, or both are now due on July 20, 2020.  No form, no letter, or anything else is required to claim this deadline extension.

To be clear, this only covers income tax for 2019.  It does not cover:

• Any other tax type.  Monthly or annual returns for General Excise, Withholding, Transient Accommodations, Estate and Generation-Skipping, Fuel, Liquor, Tobacco, and Rental Motor Vehicle/Tour Vehicle Taxes are still due at the same time.  Payments are still due at the same time.  If electronic filing or payments are required, they are still required.
• Income tax for any other year.  Delinquent payments for any past year are still due and payable, and interest continues to run until the payment is made.
• Estimated income tax for 2020.  In particular, the estimated tax for the first quarter of 2020 is still required to be paid by April 20, 2020.

Also, not everyone gets a benefit from the deadline extension!  If you are due a tax refund, claim it as soon as possible!  The Tax Office is still processing mailed-in and electronic returns.  If you don't claim your refund, the State will happily keep it for another three months - and they don't have to pay you interest for doing so!

The Tax Foundation of Hawaii is still alive, well, and working remotely!  Stay safe, everyone!

April & May Legislative Breakfast Briefings Will Be Rescheduled Once New Legislative Schedule Is Announced
Each briefing counts as 1 CE Credit for CPAs licensed in the State of Hawaii. 

 Who's Watching The Store?
By Tom Yamachika, President

It seems like every year we have a legislature, we have dozens of legislative tax proposals to wade through.  Some would lessen the burden on the beleaguered consumer, but most would do the reverse.

Most of the tax bills, as always, would put more money in the hands of lawmakers and bureaucrats at the expense of most of us who must work for a living and try to make ends meet. 

When do they know that enough is enough?

Here’s the simple answer:  When somebody — or preferably LOTS of somebodies — tells them. 

Here are some examples.  The House was considering the state improvement surcharge (House Bill 1990), which we wrote about here.  It’s just another name for “temporary” GET hike.  Before the House Finance Committee, there were eight pieces of testimony, including ours.  Four were in support, two in opposition, and two offered comments without taking a position.  Not what you could call a groundswell of opposition.

How about the bill to hike our income tax rate yet again (HB 2385), this time to add 12% and 13% income tax brackets, and make Hawaii the second in the nation in top tax rates, only a hair behind California’s millionaire’s tax of 13.3%?  Before the House Finance Committee, there were six pieces of testimony, including ours.  Four were in support, some requesting amendments; two offered comments without taking a position.  Ho-hum. 

And what about the carbon tax, Senate Bill 3150, would immediately add 17 cents per gallon to our already pricey gasoline prices and keep going until the increment was more than 50 cents per gallon, as we previously wrote about here?  We counted 94 pieces of testimony before the Senate Ways and Means Committee, of which there were 71 in support, 12 opposed, and 11 comments.  The opposition was enough to get our Senate Transportation chair and one other senator excited enough to vote “no” at the Ways and Means hearing, but the bill still passed. 

You may think, “Well, what are you doing about it, Tax Foundation?”  We’re the alarm.  We can bark.  We can explain what the bills do so you, the public, and the lawmakers have a better understanding about them.  But we can’t do much more than that.  You, the electorate, can decide whether to keep the same lawmakers or whether to show them to the door. 

Put yourself in the shoes of your senator or representative.  A bill comes across your desk, there is a cadre of people who support it, but there is visible and substantial opposition.  Wouldn’t you pause and think before casting your vote?  You certainly would need to be accountable and have reasons prepared to give the side that you didn’t vote for.

And what if the same bill came across your desk with its supporters, but this time there were no opposition or token opposition?  Wouldn’t you vote for it too?  You might not even want to or need to understand what the bill is about.  After all, there are literally thousands of bills going through the legislative hopper each year.  It’s a Herculean task to thoroughly understand the benefits and detriments of each one, so it’s only natural to focus on those bills that people really care about.

Do you care about the amount of money that gets sucked away from your wallet by our government?  Do you feel that enough is enough?  If you do, you need to show your lawmakers that you care.  Then, at least, lawmakers will be forced to think about the implications of what they are voting on and, hopefully, come to principled decisions instead of simply following the herd of lemmings before them.

April & May Legislative Breakfast Briefings Will Be Rescheduled Once New Legislative Schedule Is Announced

Each briefing counts as 1 CE Credit for CPAs licensed in the State of Hawaii. 

Green Fees - But Not The Golfing Kind
By Tom Yamachika, President

Senate Bill 2696, which the Senate has just given to the House for consideration, is a bill “Relating to Green Fees.”  These green fees have nothing to do with playing golf, however; they are per visitor, per stay charges the money from which goes to protect and preserve the environment.  Some national governments already charge them, including the Republic of Palau, New Zealand, and the Maldives.  So, SB 2696 is calling for a feasibility study and implementation plan, assuming that the fee will be charged beginning in 2022.

The State Office of Planning is budgeting the cost of such a study at $450,000.  Let’s save our money, folks.  No other state in the United States charges such a fee.  Not because they don’t want to, but because it’s unconstitutional.

A very long time ago, in 1865 to be exact, Nevada passed a law imposing a tax of one dollar upon every person leaving the state by any railroad, stagecoach, or other common carrier.  (I said this was a long time ago.  Motor buses with internal combustion engines hadn’t been invented yet.)

Mr. Crandall, who was employed by a stagecoach company, challenged the tax.  The Nevada Supreme Court sustained it, and an appeal brought the case to the U.S. Supreme Court.  That case, Crandall v. Nevada, 73 U.S. 35 (1867), established the constitutional right to travel and struck the tax down.

“We are all citizens of the United States,” the opinion says, “and as members of the same community must have the right to pass and repass through every part of it without interruption, as freely as in our own states.  And a tax imposed by a state for entering its territories or harbors is inconsistent with the rights which belong to citizens of other states as members of the Union and with the objects which that Union was intended to attain.  Such a power in the states could produce nothing but discord and mutual irritation, and they very clearly do not possess it.”

A green fee imposed on a per passenger, per stay basis is very similar to the Nevada departure tax that the Court voided.  First, let’s call it what it is:  it’s a tax.  Court cases, including some from the Hawaii Supreme Court, have worked on drawing a line between user fees and taxes, and the imposition envisioned by SB 2696 supports the operations of government, and a taxpayer gets no particular benefit for paying it.  That makes the imposition fall on the “tax” side of the line.

Does the proposed tax have any features that justify treating it differently from the Nevada departure tax?  Both burden the right of any American to travel freely between the states, so the answer appears to be no.

Well then, what about if the tax were imposed only on international departures?  Constitutional problems pop up here, too, because only the federal government may discriminate between citizens and foreigners in applying taxes.  According to a more recent Supreme Court case, Kraft General Foods v. Iowa, 505 U.S. 71 (1992), the Foreign Commerce Clause of the U.S. Constitution creates this prohibition.  Why?  Discriminatory treatment of foreign commerce may create problems, such as the potential for international retaliation, that concern the nation as a whole.  So, the Feds can impose cases discriminating against foreign visitors, but the States can’t.

Maybe we should just limit our green fees in Hawaii to charges for playing golf.