Wednesday, November 30, 2022
Hawai'i Free Press

Current Articles | Archives

Sunday, January 22, 2012
Using the Tax System to Hide Spending and Shift Burden
By Lowell L Kalapa @ 12:01 AM :: 7042 Views :: Maui County, Education K-12, Energy, Environment

by Lowell L. Kalapa, Tax Foundation of Hawaii

The recently submitted report on the City & County of Honolulu’s real property tax system is garnering a lot of attention because of its rather controversial recommendation to basically get rid of the numerous exemptions that have been added over the years.

Perhaps the most controversial is the recommendation to scrap the homeowners’ exemption in favor of providing tax relief to homeowners who can demonstrate that they do not have the financial resources to pay their share of the real property tax burden. The report points out that many of these exemptions have no basis in the need for tax relief but are merely granted because a taxpayer or organization somehow has “special” significance, such as being a nonprofit organization or a homeowner who happens to be disabled or elderly. None of the characteristics can be associated with a lack of resources to pay the real property tax.

The result - as the report points out - is that those so favored with an exemption benefit from county- provided services without having to pay for them. Those services are critical to the health and safety of the community from police and fire protection to sanitation. Since those favored with an exemption benefit from county-provided services without having to pay for them, that means that someone else is paying for those services.

Thus, the exemptions are a mechanism of shifting the burden of paying for county services from exempt entities to those who are required to pay the property tax because they are not so favored. While this strategy is not new, it is certainly not apparent to most taxpayers, especially to those who are afforded an exemption and someone else is paying for the services they enjoy.

For years all counties shifted the tax burden away from their voting constituents, the homeowner and residential property owners, to nonresidential property owners or businesses - commercial, industrial, agricultural and resort or hotel properties - arguing that these property owners can pass the higher cost of the property tax on to their customers. Perhaps county officials had visions that the pass on of the added burden would be to those who don’t vote for them, mainly tourists as in the case of hotel and resort properties. However, they seem to forget that these categories of properties include the stores and supermarkets where residents buy their groceries, clothes, and other needs. Thus, the added costs of the higher real property tax rates are “hidden” in the cost of everything that is consumed in the state as well as in all of the goods and services that are sold to those outside the state.

Similarly, by providing broad exemptions to certain types of real property, the real property rates imposed on others who don’t enjoy an exemption have to be higher than they could have been had those exemptions not been granted.

Further, because those favored with an exemption don’t see or experience the pain of paying the real property tax, they tend to be the very ones who want the county to provide more and more services. After all, it is not costing those favored individuals and institutions anything.

Given that it is an election year, council members may not want to deal with the recommendations of the commission, as repealing or reducing exemptions that have been enjoyed for years will, no doubt, upset those constituents who enjoy those exemptions. On the other hand, those real property taxpayers who must continue to pay the heavy burden of the tax should be just as upset when they understand that they are subsidizing those who are capable of paying their fair share of the cost of county services.

So while real property taxpayers may protest the possibility that real property tax rates may be raised to cover county spending shortfalls, will they be content with the reality that they are paying for the services that are being enjoyed by those who don’t have to pay for those services?

So while council members will have to endure the parade of those who currently enjoy blanket exemptions from the real property tax, those elected officials should also remember that their real property tax paying constituents are paying more than they have to as they are paying for not only the county services they enjoy but for those same services used by those who do not pay for those services.

--- 30 ---

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

ACA Signups Hawaii

Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Back da Blue Hawaii

Ballotpedia Hawaii

Better Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

ChinaTownWatch.com

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Life Alliance

Hawaii March for Life 

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT