If enacted, SB276 would amend the Hawaii Revised Statutes, specifically Section 235-51, adjusting the tax brackets for individuals and joint filers to incorporate the new tax rate. This change is intended to boost state revenue, helping to mitigate the impact of budgetary shortfalls that have arisen due to decreased tax revenues from the economic downturn caused by the pandemic. By taxing the upper income tier at a higher rate, the bill aims to provide more funding for public services and assist in state economic recovery efforts.
Summary
SB276, introduced in the Thirty-First Legislature of Hawaii, seeks to increase the state income tax rate on high-income earners. The bill proposes a five percent tax increase specifically targeted at those in the highest income brackets over the span of six years. It aims to address the significant economic disparities exacerbated by the COVID-19 pandemic, which disproportionately affected workers in middle and low-wage positions, leading to a widening gap in income inequality in Hawaii. As unemployment rates soared to unprecedented levels during the pandemic, this bill reflects the legislature's response to a pressing economic crisis.
Contention
The bill has faced some opposition, particularly from those who argue that increasing taxes on high-income earners could drive wealth out of the state or deter investment. Critics express concern over the potential for a negative impact on the business environment, particularly in a state like Hawaii that heavily relies on tourism and hospitality sectors which are already struggling. Supporters assert that this is a necessary step toward ensuring a fair economic recovery and addressing long-standing issues of income inequality, emphasizing the importance of shared responsibility during challenging economic conditions.
A resolution to direct the Clerk of the House of Representatives to only present to the Governor enrolled House bills finally passed by both houses of the One Hundred Third Legislature.