Rep Amy Perruso

Hawaii, often celebrated for its natural beauty and cultural complexity, grapples with a complex economic landscape marked by high living costs and income inequality. To address these issues and pursue economic justice for working families, our office has introduced important economic justice proposals in recent sessions. These measures have become even more important as we face the challenges surfaced by the climate crisis, most recently in the Lahaina wildfires. We need to invest in our communities to improve community and ‘āina resilience.

One of the most noteworthy proposals is the ConAm for Keiki, which seeks to revolutionize Hawaii’s education funding approach and improve the well-being of working families. Hawaii’s Constitution was unfortunately designed, in part, to protect the wealthiest from the need to support public education through property taxes. The ConAm for Keiki aims to amend the state’s constitution to introduce a surcharge on non-owner occupied residential properties valued at over $2 million, primarily owned by out-of-state investors. These funds would be directed towards the entire public education system, from pre-school to post- secondary education. This investment in Hawaii’s future workforce could help boost economic mobility and reduce income inequality.

Another significant proposal is the introduction of a capital gains tax. Hawaii is one of the few states that taxes capital gains at a lower rate than ordinary income, disproportionately benefiting the wealthy who derive a significant portion of their income from investments. The proposed capital gains tax would establish a progressive tax rate, with higher- income individuals paying a higher percentage of their gains in taxes. This approach aligns with principles of fairness and economic justice, ensuring that those who benefit the most from investments also contribute proportionally to the state’s revenue. The revenue generated from this tax could be reinvested in critical social programs like affordable housing, healthcare, and education, directly benefiting working families.

Our office introduced a new package of economic justice bills in the 2023 session – these bills remain alive for the 2024 session. House Bill 148 (HB148) addresses property taxation by introducing a surcharge on the conveyance tax for properties deemed “prolonged vacant.” This bill aims to capture revenue from real estate that is not contributing to the local economy or housing supply. It imposes an additional tax when a prolonged vacant property is transferred or conveyed. House Bill 149 (HB149) is designed to combat tax haven abuse by modifying Hawaii’s corporate income tax regulations.
It requires corporations to include the income generated by all their foreign subsidiaries when calculating their taxable income for Hawaii state
corporate income tax purposes. This change aims to increase state tax revenue by preventing profitshifting practices. House Bill 150 (HB150) proposes changes to Hawaii’s personal income tax structure by introducing new income tax brackets and rates for high-earning taxpayers. This would increase tax rates on the very highest earners. House Bill 151 (HB151) amends Hawaii’s estate tax laws, altering the exclusion amount and exemptions for nonresidents and nonresident non-citizens. Lastly, House Bill 1190 (HB1190) proposes a wealth asset tax in Hawaii for individuals with significant assets exceeding $20 million within the state. This tax aims to address wealth inequality and generate additional state revenue. These bills collectively represent a range of proposals aimed at addressing economic justice, taxation, and social welfare in Hawaii.

Addressing economic justice for working families in Hawaii is a crucial endeavor that necessitates thoughtful tax legislation. The ConAm for Keiki, the proposed capital gains tax, and other legislative initiatives introduced recently represent significant steps toward a fairer and more equitable tax system. These proposals aim to reduce the tax burden on working families, ensure that the wealthiest residents contribute their fair share, and provide essential financial support to those in need. Hawaii’s unique economic challenges demand innovative and comprehensive solutions, and by implementing these tax reforms, the state can move closer to achieving economic justice for all its residents, fostering a brighter and more equitable future for all of our community members.