The Real Story About Taxes
I’ve been watching the debate over taxes in Hawaii first-hand for four years now. There has been so much talk about the size of government and taxes in the media lately, but unfortunately most of it has clearly been empty rhetoric. Calls are often made to “right-size” government without any real plan to make it happen, or instead to just cut “waste.” However, after cutting billions of dollars from our state budget over the last three years, I can tell you there are few places left to cut “waste.” In fact, recent cuts have already left many departments short-staffed which has begun to negatively impact government services to businesses and families. If people want further cuts, government services will need to be clearly identified that people can live without.
Calls to arbitrarily reduce spending end up shrinking budgets for all programs, which just makes all government services less effective. Instead, we should be asking ourselves what services the people of Hawaii want their government to provide. Eliminate the services people are willing to live without, but adequately staff and fund the ones we want to keep. Once we identify what priorities and role we want government to play, then we build our budget to match. The end result is a much more effective and efficient government.
All of this being said, sometimes tax proposals still just don’t make sense.
Killing the New Tax On Pensions and Retirees
Despite a concerted effort by leaders in the House to push forward a new tax on pensions that would impact many retirees, many of us objected. Different versions of the bill would create a new tax on pensions starting at an income level of $37,000. Fortunately, with the help of AARP, several unions, and the State Senate, we were able to kill the bill.
The House strategy to pass the bill was refusing to approve other unrelated measures and hold them hostage until the Senate agreed to pass the new pension tax. The Senate held their ground and refused to pass the pension tax. While other important bills ended up dying as a result, the tradeoff was ensuring that the new pension tax did not pass either.
Stopping the Tax Increase on Maintenance and Association Fees
I want to thank all the Kailua residents who lent their support to oppose the tax increase on maintenance fees and association fees. If you live in an apartment, a condominium or an association, keeping up with rising fees is difficult as is, and there were other ways to balance the budget that would not impact the average working family. At the time, Senate Bill 2402 proposed a 1% General Excise Tax increase on all monthly condominium association and maintenance fees to raise revenue for the state. Early on several of us supported an amendment to prevent regular maintenance fees and association fees from being subject to this tax. However, it failed when only 15 out of 51 of us supported the move.
In the end, however, public support changed other minds and the proposed increase was dropped. Thank you to everyone who responded to my letter asking for your assistance to oppose this increase; we could not have done it without you.
Opposing New Conveyance Taxes
Homeowners also faced increases in conveyance taxes. House Bill 1741 increased the taxes on any sales or transfers of properties, and also reduced funding for affordable rental housing and land conservation efforts. Even with many of us in opposition, this bill ended up passing.