Creating a Fairer State Tax System and Economy for All Families

In November 2013, Hawaii Appleseed released a report entitled Creating a Fairer State Tax System and Economy for All Families, outlining our 5 policy strategies we aim to pursue in the 2014 legislative session.

Click here to read the full tax report.
Click here for an overview of our proposed tax relief policies.
Click here for an overview of our proposed revenue generating measures.

Our state’s lower-income families are faced with almost insurmountable structural challenges to escaping poverty. They face the highest cost of living and highest cost of shelter in the nation, with three-quarters of extremely low-income people spending over half of their income on shelter. At the same time, our wages are the lowest in the nation when adjusted for the cost of living, and people in poverty are paying more in taxes than residents in all but three states.

During the 2013 legislative session, our coalition to improve economic equity for our state’s low and moderate-income wage earners and their families made significant progress, passing through hearings in both chambers and reaching the joint conference committees. Our package of bills last session 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.

Since the session ended, we have continued our research on the viability of these two initiatives and identified new policies that would make a real difference in the lives of individuals and families struggling to make ends meet. The attached report, “Creating a Fairer State Tax System and Economy for All Families,” is the result of that effort. Also attached is a brief summary of those recommendations as well as an overview of possible sources of revenue that will more than cover for the expense of the recommended package of programs, while at the same time creating a more equitable tax system. The full report is also available on our website at hiappleseed.org/tax-advocacy.

The report recommends that during its 2014 session, our legislature adopt a package of five policies that will significantly increase the economic vitality of our low and moderate-income residents. These include:

  • 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
  • Adopt a state funded earned income tax credit program
  • Raising Hawai‘i’s minimum wage to $9.50

We have a real chance to affect the lives of thousands and thousands of families struggling to survive in Hawaii. To do so, our state must remove the many structural barriers they must overcome to achieve financial self-sufficiency. That requires finding equitable ways to preserve and increase their income.

Click here to read the full tax report.