Relating To A Child Tax Credit.
The bill includes provisions for the refundable tax credit to be calculated based on the taxpayer's adjusted gross income, with varying amounts designated for dependents under eighteen. For instance, families earning less than $40,000 annually would qualify for a $650 credit per eligible child. The proposed program is designed not just to assist families directly through refunds, but also to stimulate broader economic activity by improving disposable income for working families.
Senate Bill 1053 proposes the establishment of a refundable child tax credit in Hawaii. The legislature emphasizes the need for such a tax credit due to the state's taxation system disproportionately impacting low-income households. A 2018 study highlighted that these households face a significantly higher tax burden compared to higher-income households. By introducing this bill, lawmakers aim to enhance support for families with children, reduce child poverty, and provide financial assistance in the face of previous federal tax credit reductions following the American Rescue Plan's expiration in 2021.
If passed, SB1053 will amend Chapter 235 of the Hawaii Revised Statutes to incorporate the new refundable child tax credit structure. This would represent a significant legislative step aimed at addressing child poverty in Hawaii, aligning state policy more closely with the objectives of the federal tax credits that previously supported millions of families. The potential for improved economic conditions for low- and moderate-income households could foster long-term benefits for the state as a whole.
While the bill is primarily framed as a means of supporting working families, discussions surrounding SB1053 may yield contention regarding its fiscal implications. Concerns could arise about the potential impact on state revenues and the administrative costs associated with the implementation of the new tax credit system. Additionally, debates might emerge around ensuring equitable access to the benefits, especially regarding eligibility criteria and the various income thresholds that dictate the credit amounts.