Wednesday, April 08, 2020
Hawai'i Free Press

Current Articles | Archives

Thursday, January 31, 2013
Tax Cut or Minimum Wage Hike? Hawaii 4th-Highest Taxes for Low Income Residents
By Andrew Walden @ 4:14 AM :: 5195 Views :: Labor, Small Business, Taxes

Tax Cut or Minimum Wage Hike?

Hawaii 4th-Highest Taxes for Low Income Residents

by Andrew Walden

A newly released report shows that Hawaii imposes the fourth highest taxes on the poor. According to the Institute on Taxation and Economic Policy (ITEP), authors of the report, Hawaii’s high tax burden on the poor is due to:

  1. the GE Tax,
  2. the inclusion of food in the GE Tax,
  3. an income tax which hits low income workers, and
  4. the absence of an Earned Income Tax Credit for low income workers

Obviously this impacts the debate on Abercrombie’s proposal to hike the minimum wage.

Instead of cutting taxes on the poor, Abercrombie proposes to extract more taxes from them by hiking the minimum wage.  Because only a small portion of the lowest 20% of Hawaii earners are paid minimum wage, a tax cut would help more persons than a hike in the minimum wage. A tax cut may also provide net benefits to the State due to decreased demand for welfare benefits and other poverty-related services.

The Hawaii Appleseed Center (see below) is urging Legislators to provide tax relief to the poor by enacting an Earned Income Tax Credit and by eliminating or reducing income taxes levied against low wage earners.  Since many of Hawaii’s minimum wage workers are actually earning substantially more than minimum wage because they are waiters or other tip-earners, offering tax relief will shift the benefits to the genuinely poor while reducing the pressure on Hawaii’s restaurant industry.

(It should be noted that the ITEP report actually understates the regressive-ness of Hawaii’s tax structure because their report does not consider the effect of Act221 ‘Hi-Tech’ Tax Credits, Historic Home Property Tax Credits, Solar Tax Credits and other scams which are used to cut the taxes of high earners even more than ITEP has calculated.)  

Here are some key points from: Who Pays: A Distributional Analysis of the Tax Systems in All Fifty States Executive Summary

States commended as “low tax” are often high tax states for low- and middle-income families. The ten states with the highest taxes on the poor are Arizona, Arkansas, Florida, Hawaii, Illinois, Indiana, Pennsylvania, Rhode Island, Texas, and Washington. Seven of them are also among the “terrible ten” because they are not only high tax for the poorest, but low tax for the wealthiest.

“The Earned Income Tax Credit improves progressivity in 24 states (but not Hawaii) and the District of Columbia, while nine states undermine progressivity by allowing taxpayers a reduced rate on capital gains income.”

PDF: Breakdown of Hawaii Tax Burden by Household Income

  *   *   *   *   *

PBN: Hawaii’s poorest residents pay highest share of income in taxes

Low- and middle-income families in Hawaii pay a larger share of taxes than the top 20 percent of earners in the Islands, ranking the state the fourth worst in the nation with a tax system that favors high earners, according to a study released by the Institute on Taxation and Economic Policy.  Hawaii ranked behind Arizona, Arkansas and Florida….

The data show that the bottom earners pay the highest percentage of G.E.T., while the top earners pay the most income tax.

The group noted that the Hawaii Legislature is considering several bills this year that would help to reduce the tax burden on low-income families by creating a state earned income tax credit program and a poverty tax credit.

“These bills would go a long way to restoring equity in our state income tax system by implementing the proposed state EITC and poverty tax credit,” Victor Geminiani, executive director of the nonprofit Hawaii Appleseed Center on Law and Economic Justice, said in a statement. “They would help the poorest among us survive the many economic challenges they face to their basic survival while eliminating the anomaly of taxing further into poverty those individuals and families who are earning the state’s lowest incomes.”

Hawaii ranked as the fifth-worst state in the nation in the last report done by the Institute on Taxation and Economic Policy, which was in late 2009.

  *   *   *   *   *

The Price of paradise for Hawaii’s low-income families

From the Hawaii Appleseed Center  November, 2012

The financial pressures on Hawaii’s low-income families are overwhelming.  Our state has the highest cost of living and housing in the nation with 75% of our poor families spending more than 50% of their income on housing.  We also have the lowest rate for adjusted wages paid in the country while taxing our poor at a higher rate than all but 4 other states.  To help our struggling wage earners living in poverty, Hawaii Appleseed has been preparing tax initiatives for consideration in this upcoming legislative session that will provide critical tax relief to low income workers. They include:

Creating a state Earned Income Tax Credit (EITC) patterned after the federal program that has been such a bi-partisan success since its adoption in 1975. The federal EITC program provides a one-time wage supplement to low income wage earners. Twenty three states on the mainland have created a state EITC programs because it puts money directly back in to the pockets of those who need it most while also acting as a wage supplement and an incentive for employment. Click here to find out more about a state EITC program.

Eliminating the income tax charged to wage earners who earn below the poverty level.  Currently Hawai’i charges working-poor families higher tax bills than all but four other states and one of only 10 states to levy an income tax on a full-time worker in a family of three making minimum wage ($15,080). Click here to find out more about eliminating income tax for poor wage earners.

  *   *   *   *   *

SA: Hawaii among most regressive states for taxation

The Hill: Study: State tax systems regressive

 

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

808 State Update AM940

ABCDEFG Blog

ACA Signups Hawaii

ACCE

ALEC

Alliance Defending Freedom

Aloha Life Advocates

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

American Mothers of Hawaii

AMVETS-Hawaii

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Audit The Rail

Ballotpedia Hawaii

Better Hawaii 

Blaisdell Memorial Project

Broken Trust 

Build More Hawaiian Homes Working Group

CAFR Hawaii

Castaway Conservative

Children's Alliance Hawaii

Children's Rights Institute

ChinaTownWatch.com

Christian Homeschoolers of Hawaii

Citizens for Recall

Cliff Slater's Second Opinion

Coffee Break

CSIS Pacific Forum

DAR Hawaii

DeedySupport.com

DVids Hawaii

E Hana Kakou Kelii Akina

E Māua Ola i Moku o Keawe

Farmers For Choice Hawaii

FIRE

Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Get Off Your Butts!

God, Freedom, America

Grassroot Institute

Habele.org

Hawaii Aganst Assisted Suicide

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 Crime Victims' Rights

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defending Marriage

Hawaii Defense Foundation

Hawaii Families for Educational Choice

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Firearm Community

Hawaii Fishermen's Alliance

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii March for Life

Hawaii Meth Project

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Right to Life -- Big Island

Hawaii Right to Life -- Oahu

Hawaii Shield Law Coalition

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

Heritage Foundation

HI Coalition Against Legalized Gambling

HIEC.Coop 

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Homeless Crisis

Honolulu Navy League

Honolulu Traffic

Horns of Jericho Blog

House Minority Blog

House Republican Caucus YouTube

HPACC

Hump Day Report

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

KeyWiki

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

MentalIllnessPolicy.org

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

NARTH

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

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

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Pacific Aviation Museum

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

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

School Choice in Hawaii

SenatorFong.com

SIFE Remington

SIFE W. Oahu 

Sink the Jones Act

Smart About Marijuana--Hawaii

St Marianne Cope

State Budget Solutions Hawaii

State Policy Network

Statehood for Guam

Tax Foundation of Hawaii

The Harriet Tubman Agenda

The Long War Journal

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

Truth About Trade & Technology - Hawaii

UCC Truths

Union Members Know Your Rights

US Tax Foundation Hawaii Info

Valor in the Pacific

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT