STAND. COM. REP. NO. 352-22

Honolulu, Hawaii

, 2022

RE: H.B. No. 1507

Honorable Scott K. Saiki

Speaker, House of Representatives

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Economic Development, to which was referred H.B. No. 1507 entitled:

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

begs leave to report as follows:

The purpose of this measure is to:

(1) Increase the tax rate on capital gains; and

(2) Make the Earned Income Tax Credit refundable and permanent.

Your Committee received testimony in support of this measure from the Hawai‘i Alliance for Progressive Action, Hawaii State Teachers Association, Hawai‘i Appleseed Center for Law and Economic Justice, Hawai‘i Alliance for Community-Based Economic Development, Hawaii Children's Action Network Speak!, Democratic Party of Hawai‘i Education Caucus, Imua Alliance, Pono Hawai‘i Initiative, Hawai‘i Association of School Psychologists, Hawaii Chapter of the American Academy of Pediatrics, League of Women Voters of Hawaii, Parents And Children Together, Americans for Democratic Action Hawai‘i, Aloha United Way, Hawai‘i Public Health Institute, Hawai‘i Health & Harm Reduction Center, UNITE HERE Local 5, and ten individuals. Your Committee received testimony in opposition to this measure from the Hawai‘i Association of REALTORS, Hawaii Bankers Association, Hawaii Food Industry Association, and two individuals. Your Committee received comments on this measure from the Department of Taxation, Department of Budget and Finance, Chamber of Commerce Hawaii, Tax Foundation of Hawaii, and Grassroot Institute of Hawaii.

Your Committee finds that the State's tax structure disproportionately impacts working families as it places one of the highest tax burdens on low-income households in the nation, while higher earning households pay a smaller percentage of their income in state taxes. Your Committee further finds that the Earned Income Tax Credit has helped many local families maintain financial security; however, the tax credit is set to expire this year. This measure seeks to provide more equality in the State's tax system by increasing the capital gains tax and making the Earned Income Tax Credit permanent and refundable.

As affirmed by the record of votes of the members of your Committee on Economic Development that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1507 and recommends that it pass Second Reading and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Economic Development,

____________________________

SEAN QUINLAN, Chair