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Saturday, February 01, 2014
Regressive Taxes: State Hypocrisy on Minimum Wage
By Andrew Walden @ 8:30 PM :: 4838 Views :: Labor, Small Business, Taxes, Cost of Living

“…our residents living in poverty pay more in state taxes than all but three other states….” – Hawaii Appleseed, Restoring Economic Equity in Hawaii

by Andrew Walden

Hypocritical? 

Minimum wage laws require employers to bear a burden the State apparently won’t carry itself.

In his State of the State speech, Governor Abercrombie said he wants small businesses to pay minimum wage workers more -- but neither he nor the Legislature is doing anything to cut Hawaii's 4th-highest-in-the-nation taxation of the poor.

Last year’s effort to boost the minimum wage failed in Conference over the tip credit. Apparently Senate negotiators felt it was more important to stick it to restaurateurs than it was to help genuine minimum wage earners.

In Hawaii few earn minimum wage. The US Bureau of Labor Statistics reports only 7,000 work at $7.25/hour and another 7,000 tip-earning employees receive the $0.25 tip credit minimum wage of $7.00/hour plus tips.

The Hawaii Appleseed Center backs a higher minimum wage but is also promoting a four point program aimed at reducing the tax burden on Hawaii’s poorest:

  • Update Low-Income Household Renters Credit
  • Update our Refundable Food/Excise Tax Credit
  • Create a Low-Income Workers Credit
  • Adopt a State Earned Income Tax Credit

These tax proposals would help far more people than the 14,000 affected by a minimum wage hike but so far are getting no traction in the legislature. Legislators are generous with small businesses’ money—even giving a boost to $20/per hour waiters--but confronted with slightly reducing the inflow of State money, it suddenly gets stingy.

Instead, the Senate Judiciary Committee January 30 passed Clayton Hee’s SB2609 which boosts the minimum wage but does nothing to reduce taxes on the poor. Rather than increasing it from a paltry $0.25, SB2609 eliminates the tip credit.

Apparently Hee learned nothing from last year’s debacle.

---30---

Related: Flawed Minimum Wage Hike Advocacy Will Cost Hawaii's Poorest Workers $7M this Year

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