Grassroot Testimony on Repeal of Corporate Income Tax

February 4, 2015

To: Senate Committee on Economic Development & Technology

Sen. Glenn Wakai, Chair

Sen. Sam Slom, Vice Chair


From: Grassroot Institute of Hawaii

President Keli’i Akina, Ph.D.




Dear Chair and Committee Members:

The Grassroot Institute of Hawaii would like to offer its comments on SB 958, which seeks to encourage economic growth by repealing the corporate income tax.

One issue that we can agree on regardless of party is the need to encourage economic growth and investment in our state. As Hawaii’s leading free market think tank, the Grassroot Institute favors measures that rely less on government action than on reducing the economic disincentives and regulations that have hampered business, entrepreneurship, and investment in Hawaii. One such drag on economic growth can be found in the state’s corporate income tax.

Contrary to what some believe, the state’s corporate income tax is not a significant source of revenue for the state—in fact it comprises less than 2% of general fund revenues.

However, the impact that a repeal of the corporate income tax could have would go far beyond that comparatively minor investment in the economic future of the state. In fact, government projects intended to encourage investment and business innovation in Hawaii can easily spend far in excess of the amount contemplated by this simple tax cut, and without sending as powerful a message that Hawaii is open and friendly to business and entrepreneurship.


Moreover, it is a message that is badly needed. The past decade has seen the state’s businesses continue to lose ground to mainland and overseas competition. In order to reverse this trend it is necessary to take bold action and embrace policies that improve the state’s business climate.

losing ground

If we want to see economic growth, lower unemployment, and a healthy fiscal future for our state, we must do what we can to lower the cost of doing business in Hawaii. Initiatives that lower the taxes levied on businesses are one way to invest in a better economy by simply getting government out of the way.

Thank you for the opportunity to submit our comments.


Keli’i Akina, Ph.D.

President, Grassroot Institute of Hawaii

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