STAND. COM. REP. NO. 2225

Honolulu, Hawaii

RE: S.B. No. 2484

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2484 entitled:

"A BILL FOR AN ACT RELATING TO ESTATE TAXES,"

begs leave to report as follows:

The purpose and intent of this measure is to maintain the responsibility of Hawaii residents to pay a fair and equitable tax on large estates.

More specifically, this measure increases estate taxes for Hawaii net taxable estates valued at over $10,000,000.

Your Committee received testimony in support of this measure from the Hawaii Appleseed Center for Law and Economic Justice, IMUAlliance, Life of the Land, and five individuals.

Your Committee received comments on this measure from the Department of Taxation and the Tax Foundation of Hawaii.

Your Committee finds that the federal government has significantly raised the threshold for the federal estate tax. Public Law No. 115-97, originally introduced in Congress as the Tax Cuts and Jobs Act, doubles the threshold of the federal estate tax, which will result in a reduction in federal estate tax revenues. Your Committee also finds that, by amending Hawaii's estate tax thresholds and rates, the State can capture some of the money that certain residents will no longer be required to pay to the federal government and redirect that money to the State. Your Committee believes that any additional estate tax revenue paid to the State could be used to pay for priorities that the federal government will no longer be able to support due to the significant reduction of estate tax revenues.

Your Committee has amended this measure by:

(1) Deleting the amendment to section 236E-6, Hawaii Revised Statutes, which would have added an erroneous statutory cross reference to that section;

(2) Changing the base tax amount due on Hawaii net taxable estates valued at over $10,000,000 from $1,200,000 to $1,385,000; and

(3) Making technical nonsubstantive amendments for the purposes of consistency, clarity, and style.

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 S.B. No. 2484, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2484, 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,

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DONOVAN M. DELA CRUZ, Chair