REPORT TITLE:
Income Tax; Education


DESCRIPTION:
Suspends recently enacted income tax reductions for 3 years and
dedicates the tax revenues identified with the suspension to
lower and higher education.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           2612
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO TAXATION.



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

 1      SECTION 1.  Purpose.  The legislature finds that a good
 
 2 education in the twenty-first century will increasingly determine
 
 3 success in the workplace.  Young people who do not possess the
 
 4 knowledge or educational foundation required to find and hold a
 
 5 good job will pay a high price throughout their working lives.
 
 6 Tragically, our educational institutions that are charged with
 
 7 providing quality education have been severely hampered by a
 
 8 shortage of funds due in large part to the State's stagnant
 
 9 economic climate.
 
10      In response to this situation, the legislature recently
 
11 lowered individual and corporate income tax rates in the hopes of
 
12 stimulating economic growth and enhancing tax revenues.  This
 
13 approach, however, failed to recognize that the economic future
 
14 and health of our State is better served and assured by a well-
 
15 educated population.
 
16      The purpose of this Act is to suspend the recently enacted
 
17 income tax reductions for three years and dedicate the funds
 
18 identified with the suspension to lower and higher education.
 
19      SECTION 2.  Act 157, Session Laws of Hawaii 1998, is amended
 

 
Page 2                                                     
                                     S.B. NO.           2612
                                                        
                                                        


 1 by amending section 7 to read as follows:
 
 2      "SECTION 7.  This Act, upon its approval, shall apply to
 
 3 taxable years beginning after December 31, 1998[;] and ending
 
 4 before January 1, 2001; and to taxable years beginning after
 
 5 December 31, 2003; provided that [if]:
 
 6      (1)  If a taxpayer's taxable year includes the effective
 
 7           date of the tax rate changes (unless that date is the
 
 8           first day of the taxable year), then [(1) the]:
 
 9           (A)  The tentative taxes shall be computed by applying
 
10                the rate for the period before the effective date
 
11                change, and the rate for the period on and after
 
12                that date, to the taxable income for the entire
 
13                year; and [(2) the tax]
 
14           (B)  The tax for the taxable year shall be the sum of
 
15                that proportion of each tentative tax which the
 
16                number of days in each period bears the number of
 
17                days in the entire taxable year; [provided that
 
18                sections]
 
19      (2)  Sections 4 and 5 shall take effect on June 30, 1998;
 
20           [provided further that section]
 
21      (3)  Section 5 shall apply to taxable years beginning after
 
22           December 31, 1997[.];
 
23      (4)  This Act shall be suspended from January 1, 2001 to
 

 
Page 3                                                     
                                     S.B. NO.           2612
                                                        
                                                        


 1           December 31, 2003;
 
 2      (5)  Any statutory material in this Act in existence on
 
 3           July 9, 1998, shall be reenacted during the suspension
 
 4           period;
 
 5      (6)  All additional tax revenues collected (as certified by
 
 6           the department of taxation) as a result of the
 
 7           suspension of this Act shall be placed in a special
 
 8           account in the general fund, known as the "Act 157
 
 9           Account" which shall be budgeted, appropriated, and
 
10           allocated exclusively for the purposes of lower and
 
11           higher education."
 
12      SECTION 3.  Statutory material to be repealed is bracketed.
 
13 New statutory material is underscored.
 
14      SECTION 4.  This Act shall take effect upon its approval.
 
15 
 
16                           INTRODUCED BY:  _______________________