Hawaii is experiencing a severe doctor shortage, and a recent bill to increase the state’s personal income tax to the highest in the nation, SB56, has prompted many doctors in the state to consider adding to that shortage by moving to states with lower taxes and costs of living.
Dr. Kyle Varner is a former internal medicine resident at Tripler Army Medical Center in Honolulu, where he worked for three years before leaving Hawaii in 2016. He now is an internist in Washington, affiliated with multiple hospitals in the Spokane area. During a March 11, 2021, interview with Joe Kent, Grassroot Institute of Hawaii executive vice president, Varner shared why he left Hawaii for the mainland.
Joe Kent: Let me fill you in a little bit more about this proposed tax (SB56). The income tax in Hawaii is the second highest in the nation right now, at 11%, and this proposal would increase it to the highest in the nation, at 16%, above California, which is 13%.
In other words, they’re trying to tax the wealthy, but it’s also a capital gains tax and a property tax, and it’s got all these other taxes in it, too — all aimed at the wealthy, so-called.
Tell me if this would make it harder for you to move back to Hawaii? What do you think?
Dr. Kyle Varner: Oh yes. I absolutely would not subject myself to those taxes. If I look at why I left, basically $50,000-a-year increased salary. I live in a state with no state income tax, I live in a state with a much lower cost of living.
To give you an example, I have a 5,000-square-foot, five-bedroom house on half an acre with a view that stretches to a river, and that house costs me $539,000. Such a house in Hawaii — with a view of the water, with 5,000 square feet, with five bedrooms — would easily run you a few million dollars. So I’m ahead over $100,000 every year because I left.
And then I’m a real estate investor, and the capital gains tax, obviously, is one of these really horrible things; for us, it’s kind of toxic. I wouldn’t have the opportunity to really do that in Hawaii.
Working in Hawaii, I’m paying those taxes, I’d never get the money together to be able to invest in real estate in Hawaii because the entry cost is so much higher. I just wouldn’t consider subjecting myself to another 11% state tax combined with a pay cut, combined with housing costs that are many multiples of what I pay here.
The sunshine and the aloha is nice, but it’s not worth the price.
Kent: Why did you move away?
Varner: I moved away because I want to get ahead financially, and I want to be financially independent, I want to live a good life, build up my own wealth. That’s just not possible in Hawaii, even for somebody with my earning potential.
Kent: I remember when you left, the lawmakers were trying to pass tax hikes at the time.
Varner: I recall there was a bill that in effect would outlaw direct primary care doctors and make medical licensure in Hawaii contingent on accepting Medicare or Medicaid. At the time, I had direct primary care as my career plan that I would eventually go into, and I wanted to settle down from hospital medicine.
It goes to show you an orientation of the state. The state is very much oriented towards command and control in order to push their version of social justice. What that really means is they’re going to hose everybody who’s trying to get ahead. They think that serves social justice, but go look at the parks around Ala Moana and Waikiki, and see how much social justice they’ve produced in Hawaii.
Kent: Not to mention that increasing taxes would weaken Hawaii’s health care system for everyone. It’s actually hurting the people it’s meant to help.
Varner: I don’t understand why doctors live in Hawaii, unless they’re in the military. It’s a nice place to live, but you’ve got to think about when you’re talking about a $100,000-a-year difference in your bank account. You take that out over 10 years and invest it, that’s enough to retire on.
In order to get a doctor to come to Hawaii, you have to find somebody who puts a crazy premium on the quality of life. Let’s not forget that there are some very real quality-of-life problems in Hawaii, like the traffic. I sit in traffic. My commute is 15 minutes from my house to the door of the hospital. It might be cold outside, but I also have a heated garage and a heated car.
Hawaii could be an amazing, amazing place, where people have a really high quality of life and everybody wants to come live there. But it’s not that way because the government of Hawaii is extremely heavy-handed, extremely invested in central planning.
If you want to really look at who benefits, it’s the very wealthiest, over and over again.
The property owners in Hawaii have benefited from the tremendous inflation in property values because of land-use regulations. The bureaucrats and the public employees have these pensions that the state can’t afford. They’re always saying that they’re helping out the little guy, but they always help out the insiders instead. That’s just how it works.