The Spirit of Aloha Doesn’t Extend to Taxes

Hawaii is famous around the world for being friendly, warm, and welcoming. It’s paradise on Earth…except when it comes to your wallet.

The state persistently receives criticism from think tanks for its high cost of living and oppressive tax scheme. It has almost reached the point where it’s more notable when we don’t end up on the bottom of a nationwide ranking related to taxation or government regulation.

Now, Hawaii finds itself at the top of a list. Unfortunately, that’s not a good thing. Kiplinger.com, the financial analysis site, has rated Hawaii the “Least Tax Friendly State in the U.S.”  Unsurprisingly, our heavy excise tax and personal income tax rates received particular criticism:

“Temporary income tax rate hikes expired in 2016, lowering the top rate from 11% to 8.25%. But that top rate kicks in at just $48,000 for individual filers. Also, don’t be fooled by Hawaii’s 4% sales tax rate. Since it’s due on virtually all transactions, the pocketbook effect is severe.”

The state’s gasoline tax ($0.43 per gallon), sin taxes, hotel tax, rental car tax, and wireless taxes also contributed to the poor rating. Honolulu’s Rail surcharge is mentioned multiple times as the excise tax compounds with other taxes to drive prices up even further. The only bright spot?.

“Property taxes as a percentage of home value are the lowest in the U.S.”

Granted, none of this is particularly new to those of us who pay those taxes. However, we must recognize the cumulative effect of living in the country’s “least tax friendly state.” Not only does it make everything more expensive, and not only does the regressive excise tax fall heaviest on those making the least, but it also acts as a barrier to economic growth.

If there’s one thing we can learn from the annual “Rich States Poor States” report, it’s that states with lower tax rates and fiscally responsible policies experience more economic growth and job creation than states with high taxes and a local government in love with red tape.

Unfortunately, Hawaii has both the big taxes and the big government. If we want to see more investment in our state and a thriving economy, then we must do what we can to add a little more “aloha” to our tax policy.

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