STAND. COM. REP. NO. 3334

Honolulu, Hawaii

RE:    S.C.R. No. 59

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.C.R. No. 59 entitled:

"SENATE CONCURRENT RESOLUTION REQUESTING THE TAX REVIEW COMMISSION TO STUDY CONFORMITY OF STATE INCOME TAX LAW WITH THE INTERNAL REVENUE CODE AS IT RELATES TO THE STANDARD DEDUCTION AND PERSONAL EXEMPTION,"

begs leave to report as follows:

     The purpose and intent of this measure is to request the Tax Review Commission to evaluate whether the standard deduction and personal exemption under chapter 235, Hawaii Revised Statutes, should be increased or conformed to the Internal Revenue Code.

     Your Committee received comments on this measure from the Department of Taxation.

Your Committee finds that the amounts of the standard deduction and personal exemption for federal income taxation set forth in the Internal Revenue Code are higher than the corresponding amounts for state income taxation set forth in chapter 235, Hawaii Revised Statutes.  Your Committee also finds that unlike the Internal Revenue Code, the Hawaii Revised Statutes do not provide for the automatic adjustment of the standard deduction and personal exemption for inflation.

Your Committee notes that pursuant to article VII, section 3, of the state constitution, the Tax Review Commission has the duty to evaluate the State's tax structure and recommend tax policy.  Your Committee therefore believes that it is both appropriate and necessary for the Tax Review Commission to evaluate whether the standard deduction and personal exemption under chapter 235, Hawaii Revised Statutes, should be increased or conformed to the Internal Revenue Code.

     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 concurs with the intent and purpose of S.C.R. No. 59 and recommends its adoption.

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

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JILL N. TOKUDA, Chair