STAND. COM. REP. NO. 335

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1336
                                        




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committees on Labor and Environment and Commerce and
Consumer Protection, to which was referred S.B. No. 1336
entitled: 

     "A BILL FOR AN ACT RELATING TO PREPAID HEALTH CARE INCOME
     TAX DEDUCTION,"

beg leave to report as follows:

     The purpose of this measure is to allow employers to deduct
from gross income for state income tax purposes premiums paid or
incurred by an employer toward a prepaid health care plan.

     Testimony in support of this measure was received from the
Department of Taxation, Department of Human Services, and one
individual.  The Tax Foundation of Hawaii submitted comments.

     Your Committees find that the state income tax deduction
provided in this measure will allow employers to deduct from
gross income 200% of the premiums paid or incurred in providing
prepaid health care coverage to their employees.  This is in lieu
of the 100% currently allowed by the Internal Revenue Code.
Thus, this measure will encourage employers to hire full-time
employees and to voluntarily provide health insurance for
part-time or seasonal employees.

     As affirmed by the records of votes of the members of your
Committees on Labor and Environment and Commerce and Consumer
Protection that are attached to this report, your Committees are
in accord with the intent and purpose of S.B. No. 1336 and

 
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                                   STAND. COM. REP. NO. 335
                                   Page 2


recommend that it pass Second Reading and be referred to the
Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Labor and
                                   Environment and Commerce and
                                   Consumer Protection,



____________________________       ______________________________
BRIAN KANNO, Co-Chair              BOB NAKATA, Chair



____________________________       
BRIAN T. TANIGUCHI, Co-Chair

 
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