Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Intergovernmental Affairs, to which was referred S.C.R. No. 73 entitled:

begs leave to report as follows:

The purpose of this measure is to request Hawaii's Congressional delegation to work to abolish the death tax permanently.

Your Committee received testimony in support of this measure from the Hawaii Automobile Dealers' Association. Testimony in opposition was received from the League of Women Voters. Comments were submitted by the Department of Taxation.

Your Committee is aware of the tremendous financial burden the federal estate tax imposes upon families, particularly in Hawaii with its high real estate values. Owning property in Hawaii is not comparable for estate tax purposes to owning property on the mainland. The heirs to the inheritance may be forced to secure a loan or to sell the property to pay the estate tax.

The situation is particularly dire for farmers and small businesses whose owners may have worked all their lives to make a success of the farm or business. The heirs often desire to continue with the farm or the small business, which may have been in the family for generations, but may be forced to sell the farm or business to pay the estate tax.

Your Committee has amended this measure by:

(1) Changing "death" to "estate" tax for accuracy;

As affirmed by the record of votes of the members of your Committee on Intergovernmental Affairs that is attached to this report, your Committee concurs with the intent and purpose of S.C.R. No. 73, as amended herein, and recommends that it be referred to the Committee on Ways and Means, in the form attached hereto as S.C.R. No. 73, S.D. 1.