STAND. COM. REP. NO. 3256

Honolulu, Hawaii

RE:    H.B. No. 2000

       H.D. 1

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred H.B. No. 2000, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAX RELIEF,"

begs leave to report as follows:

     The purpose and intent of this measure is to amend state income tax law to conform to federal law with respect to net operating loss deductions and the election to expense certain depreciable business assets.

     The Chamber of Commerce of Hawaii provided testimony in support of this measure.  The Department of Taxation testified in opposition to this measure.  The Tax Foundation of Hawaii and 1978 "Conventional People" provided comments.

     Your Committee finds that, under current law, sections 172 (with respect to net operating loss deductions) and 179 (with respect to election to expense certain depreciable business assets) of the Internal Revenue Code are not fully operative for Hawaii income tax purposes.  This measure is intended to amend state income tax law to fully conform to these Internal Revenue Code provisions.

     Your Committee has amended this measure by changing the taxable years to which the measure applies to taxable years beginning after December 31, 2050, to facilitate further discussion on the measure.

     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. 2000, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2000, 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,

____________________________

DAVID Y. IGE, Chair