STAND. COM. REP. NO. 2966

Honolulu, Hawaii

RE:    H.B. No. 2866

       H.D. 1

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2010

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred H.B. No. 2866, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to ensure the State's ability to capture or "pick-up" the state death tax credit as it existed in the Internal Revenue Code on December 31, 2009.

     The Department of Taxation testified in opposition to this measure.  The Tax Foundation of Hawaii submitted comments on the measure.  Written testimony presented to the Committee may be reviewed on the Legislature's website.

     Your Committee finds that this measure would preserve the state death tax credit as it existed prior to the adoption of the federal Economic Growth and Tax Relief Reconciliation Act of 2001.

     Your Committee has amended this measure by:

     (1)  Establishing a tax on the transfer of a taxable estate located in Hawaii by a nonresident who is not a citizen of the United States;

     (2)  Adding definitions for "nonresident not a citizen" and "noncitizen transfer";

     (3)  Amending the definition of "Internal Revenue Code" to include certain federal tax principles; and

     (4)  Amending numerous citations to the Internal Revenue Code to clarify the statutory date.

     As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2866, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2866, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

DONNA MERCADO KIM, Chair