STAND. COM. REP. NO. 693

Honolulu, Hawaii

RE: S.B. No. 721

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 721 entitled:

"A BILL FOR AN ACT RELATING TO THE ESTATE TAX,"

begs leave to report as follows:

The purpose and intent of this measure is to amend the state estate tax.

More specifically, this measure repeals exemptions granted to a nonresident whose taxable estate is exempt under the law of the state where the nonresident is domiciled.

Your Committee received testimony in support of this measure from Hawai`i Children's Action Network Speaks!

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

Your Committee finds that the estate tax is intended to reduce income inequality and invest in the needs of Hawaii's working families. The tax applies only to the wealthiest individuals in the State, rather than the vast majority of working families. As a result, significant revenue is generated by simply requiring the wealthy, who can best afford the burden of an estate tax, to pay their fair share. Your Committee also finds that substantial revenues are lost due to exemptions in current state law. In certain circumstances, nonresidents are not required to pay estate tax on property that is exempt from taxation under the laws of the state where the nonresident is domiciled. Your Committee further finds that these provisions threaten the uniform fairness of the estate taxation regime and exempt a potentially massive amount of wealth from the estate tax.

Your Committee has amended this measure by changing the effective date to July 1, 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 S.B. No. 721, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 721, 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