Wednesday, August 05, 2020
Hawai'i Free Press

Current Articles | Archives

Sunday, October 26, 2014
What Will It Take to Grow GDP? (Part 3)
By Tom Yamachika @ 5:01 AM :: 3845 Views :: Labor, Small Business, Taxes

What Will It Take to Grow GDP? (Part 3)

by Tom Yamachika, President, Tax Foundation Hawaii

In this three-part series we are suggesting that we all look at growing our state’s economic position by concentrating on things we can control, like our tax rates. We examined the business tax climate rating the national Tax Foundation gave our state, and reviewed the good scores, for corporate income tax, sales tax, and property taxes, and one bad score for individual income tax.

The final area in the study, where Hawaii got slammed the hardest with a rank of #38, was unemployment tax. This is a tax that is paid by all employers and it goes into a fund that pays benefits to people who, through no fault of their own, find themselves unemployed.

Unemployment tax applies to an employee's total wages up to a certain dollar limit, like Social Security tax. This dollar limit is called the taxable wage base (TWB). Under federal law and in most states, the TWB is around $7,000. In Hawaii it's around $39,000, which is massive. It’s the second highest TWB in the country behind that of the state of Washington and earned us huge demerits in this study.

The study also considered minimum and maximum unemployment rates. We have a table of eight tax rate schedules, A being the best one and H being the worst. The particular rate schedule for a given year is determined at the end of the previous year by looking at the health of the overall fund. At the end of 2012 our unemployment fund looked pretty sickly, so 2013 was set at Schedule G with a minimum tax rate of 1.8%. And the maximum rate, which had been 5.4% for years, got jacked up to 6.6% by our legislators in 2012 effective in 2013.

In all, Hawaii fell eight rungs from last year, tying the great state of New Jersey for the honor of being the least improved state over the past year.

On the bright side, the overall fund was in better health at the end of last year so 2014 rates were set at Schedule E, an improvement of two notches. Hopefully, that will raise us a rung or two when the next business tax rankings are published.

In addition, we might want to take a good, hard look at the TWB. In 2007 the legislature saw fit to decrease the TWB to $13,000 on a temporary basis, as it had done on a number of occasions prior to 2007. Apparently, some people at the Capitol realized that the TWB was in the stratosphere and employers were hurting as a result. But in 2007, the temporary relief was accompanied by a permanent increase in unemployment benefits which in the long run has had the effect of increasing the overall tax burden on employers – pay me now or pay me later! If we really want to help employers, lawmakers might want to consider a different approach.

Between all of these issues, not only those raised this week but also in the previous two articles, there is certainly a lot for our lawmakers to think about as they approach the upcoming 2015 legislative session if they are interested in improving the business tax climate in Hawaii and in facilitating GDP growth. Finally, we should be mindful that although people will have a chance very soon to vote at the ballot box, they are constantly voting with their dollars and their feet.

- 30 -



TEXT "follow HawaiiFreePress" to 40404

Register to Vote


808 Silent Majority

ACA Signups Hawaii


Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni


Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Ballotpedia Hawaii

Better Hawaii

Blaisdell Memorial Project

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

Coffee Break

DVids Hawaii

E Hana Kakou Kelii Akina


Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

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 Advocates

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 March for Life

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

Heritage Foundation



Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

I Vote Hawaii

If Hawaii News

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

Iowa Meets Maui

Jackson v Abercrombie

Jihad Watch

July 4 in Hawaii

Kahle v New Hope

Kakaako Cares

Kau TEA Party

Kauai Co GOP

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

Mauna Kea Recreational Users Group

Middle East Forum--The Legal Project

Mililani Conservatives for Change

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

Muslim Brotherhood in America

NAMI Hawaii


National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

New Hawaiian

New Zeal

NFIB Hawaii News

No GMO Means No Aloha

Northwest Economic Policy Seminar

Not Dead Yet, Hawaii

Now What I Really Think

NRA-ILA Hawaii

Oahu Alternative Transport

ObamaCare Abortion Hawaii


OHA Lies

Opt Out Today

Pacific Aviation Museum

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii


Rental by Owner Awareness Assn

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

Sink the Jones Act

Statehood for Guam

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii