It’s absurd that REIT income is not taxed in Hawaiʻi
The Real Estate Investment Trusts taxation bill, Senate Bill 301, has advanced this far into the legislative session because a grassroots movement had a simple message: Some of the largest landowners in our state—including the Ala Moana and Pearl Ridge Shopping Centers and the Hilton Hawaiian Village—do not pay Hawaiʻi corporate income tax, while these grassroots citizens as well as other corporations and property owners pay their fair share.
REITs own about $18 billion worth of properties in Hawaiʻi, and DBEDT estimates that the corporate tax on income earned from these REITs properties would total in the tens of millions of dollars annually.
As a retired Hawaiʻi tax attorney with 45 years of corporate tax law experience and five years working at the IRS, I’d like to point out that the REITs’ argument that they shouldn’t have to pay Hawaiʻi corporate income tax because they also pay general excise tax and property tax is absurd and disingenuous at best.