Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Education, to which was referred S.B. No. 143 entitled:

begs leave to report as follows:

The purpose of this measure is to exclude from the calculation of income tax the first $20,000 of income of public school teachers.

Your Committee received testimony from the Department of Education deferring to the testimony of the Department of Taxation opposing this measure. Comments were received from the Tax Foundation of Hawaii.

The key to ensuring that the State provides quality education is to hire and retain high quality professional teachers. Your Committee finds that this measure provides a tremendous incentive for teacher recruitment and retainment.

Your Committee has amended this measure to clarify that $20,000 of compensation only for teaching shall be excluded from gross income for purposes of calculating income tax and to correct the effective date.

As affirmed by the record of votes of the members of your Committee on Education that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 143, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 143, S.D. 1, and be referred to the Committee on Ways and Means.