August 1992 Home   Newsletters

September 1992

October 1992

President's Message (Arlene Ellis)
Bus Rapid Transit vs. Rail
League Testifies - on the General Excise Tax Surcharge - 1 (Arlene Ellis)
League Testifies - on the General Excise Tax Surcharge - 2 (Astrid Monson)
League Testifies - Rail
League Testifies - Resort Mixed Use
League Testifies - Annual Development Plan
Oahu Silver Legislature
General Membership Meeting on Proposed Charter Amendments
Letter to the Editor (Lawrence H. Gordon)
Education Forum

League Testifies - on the General Excise Tax Surcharge - 2


AUGUST 25, 1992.

Two and a half years ago we testified before you to urge you not to support the State bills authorizing the G.E.T. surcharge for rail. We quoted the State Tax Review Commission's opinions as to the regressivity of excise taxes and estimated that it would cost the average Oahu family $275 a year for ten years.

By now many others have said the same, but no one has done so as clearly and in as much detail as the Tax Foundation of Hawaii. Most of my testimony today is based on Lowell Kalapa's studies and reports.

  1. Resident tax-payers are projected to pay $74 million of the total $117 million the tax is expected to generate next year if it is adopted. This is $260 per Oahu household, rising to $139 million, or about $400 per household, by 2003.

  2. Even if they get back the projected $43 million, or $155 per household, in tax credits, this is money they have paid the State in income taxes and represents no net reduction of the tax burden.

  3. The tax increase is regressive. It takes a larger share from the poor than any other income group. Tax foundation studies show that the increase amounts to nearly 25% over the present 4% tax for family incomes of $10,000 but only a 4% to 6% increase for the middle and upper brackets.

  4. Even after the State tax credit is deducted -- which it shouldn't be -- the surcharge is 0.95% of incomes under $10,000 compared with 0.19% for the average family and between .10% and .23% between $20,000 and $100,000. It thus takes 4 to 10 times as big a percentage bite of the low income family as of others. 5. Even the State tax credit itself is regressive. Lowest-income families get only $25, but the credit rises with income to $210 above $100,000.

In summary, we agree with the Tax Foundation that:

  1. The tax credit only takes money out of one of the taxpayers' pockets and puts it back into another.

  2. The burden, after individual credits, is somewhat less.. regressive than the original schedule of credits, which ranged as high as $450.

  3. The tax is still regressive, as evidenced above.

As we did in 1990, we urge you not to enact this burdensome and regressive tax.

Astrid Monson

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