SB3250

PART I

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§235- Surcharge on high-income individuals, estates, and trusts. (a) Notwithstanding any other law to the contrary, there is imposed an income tax surcharge on every taxpayer other than a corporation. The amount of the surcharge shall be equal to:

(1) Five per cent of the taxpayer's modified adjusted gross income that exceeds:

(A) $10,000,000, in the case of a taxpayer filing a joint return or as a surviving spouse;

(B) $7,500,000, in the case of a taxpayer filing as a head of household;

(D) $200,000, in the case of an estate or trust; plus

(2) Three per cent of the taxpayer's modified adjusted gross income that exceeds:

(A) $25,000,000, in the case of a taxpayer filing a joint return or as a surviving spouse;

(B) $18,750,000, in the case of a taxpayer filing as a head of household;

(D) $500,000, in the case of an estate or trust.

(b) All provisions of this chapter shall apply to the income tax surcharge. The director of taxation shall have all the rights and powers provided under this chapter to administer the surcharge.

(c) The penalties provided by section 231-39 for failure to file a tax return shall be imposed on the amount of surcharge due on the return being filed for the failure to file the schedule required to accompany the return. In addition, there shall be added to the tax an amount equal to ten per cent of the amount of the surcharge and tax due on the return being filed for the failure to file the schedule.

(d) All taxpayers who file on a fiscal year basis whose fiscal year ends after December 31 of the year prior to the taxable year in which the taxes become effective, shall file a short period annual return for the period preceding January 1 of the taxable year in which the taxes become effective. Each fiscal year taxpayer shall also file a short period annual return for the period starting on January 1 of the taxable year in which the taxes become effective, and ending before January 1 of the following year.

(e) The department of taxation may adopt rules pursuant to chapter 91 to effectuate this Act.

(f) For the purposes of this section, "modified adjusted gross income" means federal adjusted gross income reduced by any deduction (not taken into account in determining adjusted gross income) allowed for investment interest (as defined in section 163(d) of the Internal Revenue Code) or business interest (as defined in section 163(j) of the Internal Revenue Code). In the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e) of the Internal Revenue Code, and reduced by the amount allowed as a deduction under section 642(c) of the Internal Revenue Code."

PART II

SECTION 2. (a) There is established within the department of taxation for administrative purposes only a wealth tax working group. The working group shall develop a proposal to establish a state wealth tax.

(b) The wealth tax working group shall comprise the following:

(1) The director of taxation or the director's designee, who shall serve as chairperson of the working group;

(2) The chairperson of the state tax review commission or the chairperson's designee; and

(3) The chairperson of the council on revenues or the chairperson's designee.

(c) In addition to the members designated by subsection (b), the working group may invite any other appropriate person to join the working group.

(d) The initial meeting of the working group shall take place no later than sixty days after the effective date of this Act and shall be convened by the director of taxation or the director's designee.

(e) Members of the working group shall serve without compensation. No member of the working group shall be subject to section 84-17, Hawaii Revised Statutes, solely because of that member's participation on the working group.

(f) As part of its proposal the working group shall develop:

(1) A procedure for imposing a wealth tax on individuals having assets of more than $10,000,000;

(2) An appropriate wealth tax rate; and

(3) Revenue projections for the wealth tax.

(g) The department of taxation shall provide administrative and clerical support as required by the working group.

(h) The working group shall submit a report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2023.

(i) The working group shall cease to exist on June 30, 2023.

PART III

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval; provided that part I shall apply to taxable years beginning after December 31, 2021.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3250
THIRTY-FIRST LEGISLATURE, 2022
STATE OF HAWAII