Limited Progress for One of the Most Unfair State Tax Codes


| | Bookmark and Share

The Hawaii Legislature, in accordance with that state's Constitution, recently approved a measure to provide temporary but targeted tax rebates. The rebates are expected to range in value from $160 for married couples with adjusted gross incomes of less than $5,000 to $90 for couples with incomes between $50,000 and $60,000; couples with incomes above that range will not be eligible for the credit, while individuals would receive smaller rebates over the same income range.

The rebates are prompted by a constitutional requirement that tax refunds be distributed whenever the state's general fund experiences a budget surplus of 5 percent or more of state revenue in two consecutive years. The wisdom of reducing taxes, even temporarily, in response to such relatively small surpluses is certainly questionable, but the need to improve the fairness of Hawaii's tax system is not. According to the Center on Budget and Policy Priorities, a family of four earning just enough to reach the federal poverty level paid $546 in Hawaiian income taxes in 2006, the second highest amount in the country. Consequently, offering targeted tax rebates - rather than flat amounts as had been past practice - is a welcome change, but is ultimately insufficient. As the Honolulu Star Bulletin observed, a better approach would be to institute a state Earned Income Tax Credit (EITC) as numerous other states have done.

Thank you for visiting Tax Justice Blog. CTJ and ITEP staff will soon retire this domain. But ITEP staff are still blogging! You can find the same level of insight and analysis and select Tax Justice Blog archives at our new blog, http://www.justtaxesblog.org/

Sign Up for Email Digest

CTJ Social Media


ITEP Social Media


Categories