A new report from the Hawaii Appleseed Center for Law and Economic Justice recommends a series of changes to Hawaii’s regressive tax system to provide additional resources to low and moderate income families struggling to survive.
The report, “Creating a Fairer State Tax System and Economy for All Families,” identifies two problem areas. First, Hawaii’s cost of living is the highest in the country.
It costs a family of four 68 percent more for food than on the mainland. Our state also has the highest cost of shelter in the nation, with three-quarters of extremely low-income people spending more than half of their income on housing. Our workers earn the lowest wages in the country adjusted for cost of living. Finally, our residents living in poverty pay more in state taxes than all but three other states.
On top of that, regressive taxes continue to take money even from those living below the poverty level.
> The bottom 40 percent of households in Hawai‘i pay almost 13 percent of their income in state and local taxes, while the top 1 percent pay around 8 percent.
> Hawai‘i is one of only fifteen states that tax the income of residents living in poverty.
> Hawai‘i’s General Excise Tax (GET) is effectively one of the highest statewide sales tax rates in the nation. Because the GET applies to nearly all goods and services, the tax burden of the GET falls most heavily on our lowest-income households who must spend a larger share of their income on basic necessities, most of which are taxed at the full GET rate.
During the 2013 legislative session, measures backed by the Appleseed coalition survived both House and Senate but stalled in joint conference committees. The package of bills included policies to implement a state funded earned income tax credit (EITC) and eliminating state income tax liability for workers living below the poverty guidelines.
In the upcoming 2014 session, the Appleseed Center has set five targets.
— Adjusting the existing low income household renters credit for inflation
— Adjusting the existing food/excise tax credit for inflation
— Eliminating state income taxes on workers living in poverty
— Adopting a state funded earned income tax credit program
— Raising Hawai‘i’s minimum wage to $9.50
In addition to the full report, Appleseed has provided a summary of its tax recommendations, as well as an overview of revenue options that, it says, would more than cover the cost of the moves towards tax equity for low and moderate income families.
The organization’s website also provides links to related reports and resources.
There’s lots of good information and analysis here for weekend browsing.
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The bottom 40 percent of households in Hawai‘i pay almost 13 percent of their income in state and local taxes, while the top 1 percent pay around 8 percent.
Can you tell us what percentage of total income is earned by the top one percent of earners in Hawaii?
(I clicked on the link you provided but could not view anything.)
Nationally, the top one percent of earners take home 22% of all income earned in the US. The common assumption is that ‘fairness’ would dictate that they would pay around 22% of income tax revenues.
I recently read that the top 1% of income earners in New York City pay 43% of New York State’s income tax. But I wonder what their percentage is of total income earned in NYC today.
This is from a NY Times blog from almost exactly two years ago.
http://cityroom.blogs.nytimes.com/2011/12/13/to-the-citys-top-1-a-third-of-the-income/
Hawaii has some of the richest people in the world living here at least part of the year on their estates (e.g., Oprah). But they do not pay income tax, supposedly. So another issue is how to define residency.
(Another question is where the money goes: Basic services, or things that make the rich richer?)
Important to look at all forms of taxation in assessing tax fairness, including property taxes, sales/excise taxes, and income taxes.
Things like vehicle registration fees and utility bills also take disporpotionate amount from the working class. In addition, the cost of credit can severely impact those that are not educated or disciplined enough to handle it.
“(I clicked on the link you provided but could not view anything.)”
The links go to Google Docs. Ian, can you post those documents so they are accessible to all readers?
Second try, first attempt was probably blocked by spam filter.
Links to reports referenced by Ian can be found near top of page at
http://www.hiappleseed.org/creating-fairer-state-tax-system-and-economy-all-families