REPORT TITLE: 
Income tax exemptions;
corporations
DESCRIPTION:
Adds a new part to chapter 235 providing for corporate income tax
credits for contributions to certain nonprofit scholarship
funding organizations or public schools.

 
HB HMIA 2000-18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2702
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                     A BILL FOR AN ACT

RELATING TO CORPORATE FUNDING OF PUBLIC EDUCATION.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:


 1      SECTION 1.  The legislature recognizes diversity among
 
 2 children and affirms that every child is unique.  Children learn
 
 3 differently from one another and may benefit from expanded
 
 4 educational opportunities.
 
 5      It is the intent of the legislature that freedom of all
 
 6 citizens is inviolate and that nothing in this Act be construed
 
 7 to cause excessive governmental entanglement with the religious
 
 8 instruction of a nonpublic school.  With respect to a nonpublic
 
 9 school, nothing in this Act shall give a governmental agency
 
10 authority to regulate, control, supervise, or in any way be
 
11 involved in the:
 
12      (1) form, manner, or content of religious instruction,
 
13 ministry, teaching, or curriculum offered by the nonpublic
 
14 school;
 
15      (2) ability of the nonpublic school to select and supervise
 
16 qualified personnel and otherwise control the terms of
 
17 employment, including the right to employ individuals who share
 
18 the religious views of the school;
 
19      (3) internal self-governance and autonomy of the nonpublic
 

 
HB HMIA 2000-18
Page 2                                                     2702
                                     H.B. NO.           
                                                        
                                                        

 
 1 school; or
 
 2      (4) religious environment of the nonpublic school, such as
 
 3 symbols, art, icons, and scripture.
 
 4      The purpose of this Act is to:
 
 5      (1) provide an income tax credit for certain contributions
 
 6 to a nonprofit scholarship funding organization or public school;
 
 7      (2) enable corporations in this state to provide greater
 
 8 financial resources for public schools;
 
 9      (3) expand educational opportunities for children of
 
10 families that have limited financial resources; and
 
11      (4) enable children in this state to achieve a greater level
 
12 of excellence in their education.
 
13      SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended
 
14 by adding a new part to be appropriately designated and to read
 
15 as follows:
 
16             "Part    .  Income Tax Credit For Certain
 
17              Contributions To Nonprofit Scholarship
 
18             Funding Organizations And Public Schools
 
19 
 
20      §235-      Definitions.  As used in this part unless the
 
21 context otherwise requires:
 
22      "Eligible school" means a public or nonpublic primary or
 
23 secondary school that: (A) offers a general education to primary
 

 
HB HMIA 2000-18
Page 3                                                     2702
                                     H.B. NO.           
                                                        
                                                        

 
 1 or secondary students; (B) does not discriminate on the basis of
 
 2 race, color, or national origin; and (C) is located within this
 
 3 state.
 
 4      "Nonprofit scholarship funding organization" means a
 
 5 charitable organization that: (A) is exempt from federal tax
 
 6 under Section 501(a) of the Internal Revenue Code by being listed
 
 7 as an exempt organization in Section 501(c)(3) of the code; and
 
 8 (B) allocates at least 90 percent of its annual revenue to
 
 9 providing scholarships for tuition, transportation, and textbook
 
10 expenses to children enrolled in an eligible school, giving
 
11 priority to children who demonstrate a need for the scholarships.
 
12      §235-     Corporate tax credit.  A corporation that meets
 
13 the eligibility requirements of this part shall be entitled to a
 
14 credit in the amount allowed by this part which shall be
 
15 deductible from the corporation's net income tax liability
 
16 imposed by this chapter for the taxable year in which the credit
 
17 is properly claimed.
 
18      §235-     Credit for certain contributions to a nonprofit
 
19 scholarship funding organization or public school.  (a) A
 
20 corporation shall be entitled to an income tax credit under this
 
21 part for the amount of money the corporation contributes to a: 
 
22      (1) public school; or 
 
23      (2) nonprofit scholarship funding organization only if:
 

 
HB HMIA 2000-18
Page 4                                                     2702
                                     H.B. NO.           
                                                        
                                                        

 
 1           (A) the contribution is used to provide scholarships
 
 2           for tuition, transportation, or textbook expenses to
 
 3           children enrolled in eligible schools;
 
 4           (B) the corporation does not designate a specific child
 
 5           as the beneficiary of the contribution;
 
 6           (C) the contribution is used to provide scholarships of
 
 7           which at least 50 percent are given to children who
 
 8           have been enrolled in a public school during a previous
 
 9           year; and
 
10           (D) the amount of each scholarship provided does not
 
11           exceed 50 percent of the total state funding per
 
12           student in average daily attendance under the
 
13           Foundation School Program for the school year in which
 
14           the contribution is given.
 
15      (b) The amount of the credit for a contribution made in
 
16 accordance with this part shall be equal to 65 percent of the
 
17 eligible contribution.
 
18      §235-      Limitation.  The total credits claimed under this
 
19 part during a privilege period may not exceed:
 
20      (1) 75 percent of the amount of the net corporate income tax
 
21 due for the privilege period after all other applicable tax
 
22 credits are applied for credits claimed for contributions to
 
23 nonprofit scholarship funding organizations; and
 

 
HB HMIA 2000-18
Page 5                                                     2702
                                     H.B. NO.           
                                                        
                                                        

 
 1      (2) 5 percent of the amount of net corporate income tax due
 
 2 for the privilege period after all other applicable tax credits
 
 3 are applied for credits claimed for contributions to public
 
 4 schools.
 
 5      §235-      Application for tax credit.  (a) A corporation
 
 6 shall apply for a credit under this part on or within the fiscal
 
 7 or calendar period for which the credit is claimed.
 
 8      (b) The director of the department of taxation shall
 
 9 promulgate all necessary application forms and rules for the
 
10 credit authorized by this part.
 
11      (c) The director of the department of taxation shall
 
12 prescribe the form and manner of proof required to obtain the
 
13 credit authorized by this part.
 
14      §235-     Period for which credit may be claimed.(a) A
 
15 corporation may claim a credit under this part for a contribution
 
16 only for the taxable year during which the contribution was made.
 
17      (b) A contribution in excess of the limitation under this
 
18 part shall not carry forward or backward and shall not be used to
 
19 create a business loss carryover.
 
20      §235-     Transfer of credit prohibited.  A corporation
 
21 shall not convey, assign, or transfer the credit authorized by
 
22 this part to another entity unless all of the assets of the
 
23 corporation are conveyed, assigned, or transferred in the same
 

 
HB HMIA 2000-18
Page 6                                                     2702
                                     H.B. NO.           
                                                        
                                                        

 
 1 transaction.
 
 2      §235-     Severability.  If any provision of this Act, or
 
 3 the application thereof to any person or circumstances is held
 
 4 invalid, the invalidity does not affect other provisions or
 
 5 applications of the Act which can be given effect without the
 
 6 invalid provision or application, and to this end the provisions
 
 7 of this Act are severable."
 
 8      SECTION 3.  This Act shall take effect July 1, 2000 and
 
 9 shall apply to taxable years after December 31, 1999.
 
10 
 
11                         INTRODUCED BY:___________________________
 

 
HB HMIA 2000-18