Let Families Keep More of What They Earn

Hawaiʻi has the lowest wages in the nation after adjusting for our cost of living, which is the highest in the nation. We also place the 2nd highest tax burden in the country on our low-income households. Our lowest-income households pay over 13% of their income in taxes, while those at the top pay 8% or less. Faced with this one-two-three punch, almost half (48%) of our state’s residents are living paycheck-to-paycheck.

To help our struggling neighbors, we need to come together and restore tax fairness in our state. We can do that by eliminating income taxes on people in poverty, improving the already-existing Food Credit and/or Renters’ Credit, and creating a Working Family Credit, all of which are targeted at low-income and working-class households. This can be paid for by reinstating the tax rates that were in place for our highest-income earners from 2009 to 2015.

Four-Part Plan to Restore Tax Fairness

(HB209)

Working Family Credit

Help working families make ends meet by letting them keep more of what they earn

Renters’ Credit

Address high housing costs by adjusting the existing renters credit for 30+ years of inflation

Food Credit

Restore money taken from low-income people’s pockets by the GET by preventing the reduction of this credit

Restoring Revenue

Reinstate tax rates on Hawaii’s highest earners, which were discontinued in 2015 to help restore balance to our tax system

News

Legislators Passed Useful BillsStar Advertiser, May 14, 2017
According to House Speaker Scott Saiki, the creation of a state Earned Income Tax Credit is the “most consequential work in the last few years to reduce poverty and Hawaii’s high cost of living.”

Give Low-Income Workers a Tax BreakStar Advertiser, May 6, 2017
HB 209 has been sent to Gov. David Ige, who should sign it. Some 26 states and the District of Columbia have their own EITCs, and it’s time Hawaii joined the list.

Tax Credit to Aid Poor Among Bills to SurviveStar Advertiser, April 29, 2017
Key negotiators for the House and Senate advanced a bill…that would create a state earned income tax credit designed to supplement the incomes of low- and middle-income workers and help alleviate poverty.

Poverty is a Statewide Epidemic, Honolulu Civil Beat, April 4, 2017
Passing the tax fairness bill will be an act of leadership and pragmatism in addressing the challenges we face in Hawaii. It would build our strength and resilience as a community.

Tax credits would lift unfair burden on low-income taxpayers, Star Advertiser, March 27, 2017
House Bill 209 would institute long overdue reforms that would get us closer to tax fairness by updating food and renters’ tax credits, establishing a working family tax credit, and ensuring our highest income earners pay their fair share of state taxes. These improvements to our tax system are not just good for our low income working families and Hawaii overall, they reflect the truest sense of who we are as a community — one that believes in being pono.

Will This Be The Year For Tax Breaks For The Poor? Honolulu Civil Beat, March 24, 2017
Advocates for low-income families are hoping lawmakers will finally provide what they see as long-overdue tax relief, especially as the Trump administration and a Republican Congress are moving to cut support for the less fortunate.

Tax Fairness Bill Would Ease the Stress on Working Families, Star Advertiser, February 23, 2017
Last year researchers found that nearly 50 percent of Americans could not come up with $400 to meet a sudden emergency, like car repairs or medical bills…Living paycheck to paycheck is a major stressor that creates anxiety…We worry that raising taxes will cause the wealthy to flee the state. We should worry more, perhaps, about what the growing numbers of the mentally ill on the streets says about where our sense of fairness has fled.

Reducing taxes on low-income earners makes good tax and economic senseHonolulu Civil Beat, February 21, 2017
Those living paycheck to paycheck and barely getting by, currently pay up to 13 percent of their income in state and local taxes, while our wealthiest pay just 8 percent of their income….Not only does this seem unfair on its face, it makes no economic sense to tax people into poverty, which hurts all of us.

If wealthy can get tax breaks, why not low-income earners? Star Advertiser, February 9, 2017
Like most people, we believe in fairness. And there is nothing fair about the fact that, as a percentage of their income, most of the people in at the upper end of the income ladder pay a smaller percentage of their income in Hawaii taxes than those who live near the bottom.

Tax Credit UrgedHawaii Tribune Herald, February 7, 2017
It is time to support tax fairness and ensure the tax burdens of our state are shared more equitably. There are two bills, SB648/HB209, submitted in the 2017 legislative session that address tax equity.

Working Family Tax Credit Rewards Hard Work for Low Pay Star Advertiser, February 2, 2017
“Most of us take a roof overhead and paid utility bills for granted. For the working poor, these basics are some of the “economic realities that strangle,” to borrow the words of Dr. Martin Luther King Jr.”

84,000 Hawai‘i low-income keiki would be left out entirely or only partially benefit from the Congressional tax plan's Child Tax Credit increase.While Congressional leaders highlight an increase in the Child Tax Credit as a benefit for working families in their tax plan, 84,000 Hawai‘i low-income keiki would be left out entirely or only partially benefit from it.

www.cbpp.org/research/federal-tax/interactive-house-gop-child-tax-credit-increase-leaves-out-mill...
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84,000 Hawai‘i low-income keiki would be left out entirely or only partially benefit from the Congressional tax plans Child Tax Credit increase.

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Or we could cut taxes and privatize parts of our bloated state and county governments.

For details, see https://www.cbpp.org/research/federal-tax/house-tax-bills-child-tax-credit-increase-excludes-thousands-of-children-in-low
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Resources

Struggling to Make Ends Meet: The Need for a Working Family Credit

This report summarizes findings from the Hawai‘i Appleseed Center for Law & Economic Justice and QMark Research poll conducted in 2016 that revealed nearly half of Hawai‘i families are living paycheck to paycheck.  Tax credits that let low and moderate income working families keep more of what they earn would provide a measure of relief to many struggling families, a concept which six out of seven survey respondents (86%) supported.

A Working Family Tax Credit: Common Sense for Hawaii

This infographic illustrates the problems facing low-income tax payers and how a Working Family Tax Credit can help.

Why We Need Tax Credits

While Hawai‘i should eliminate income taxes for all families struggling in poverty, that alone would not return significant portions of their GET payments to them, since the amount that they pay in the GET is so much larger than the amount that they owe in state income taxes.

That is why we also need to have robust REFUNDABLE tax credits for low-income and working-class households. If tax credits are refundable, filers can get tax refunds when their credits total more than the amount of income tax that they owe.