Huge tax cut leads way of Legislature’s achievements

The following commentary was first published on May 20, 2024, by the Hawaii Filipino Chronicle.

By Keli‘i Akina

I don’t often get the opportunity to mark the end of Hawaii’s annual legislative sessions with applause. Usually, I simply celebrate that the session has finally ended and offer a bit of criticism, a few words of praise and a sigh of relief.

But this year is different. This year, there are four big reasons to say “Thank you” to our legislators, our legislative leaders and Gov. Josh Green. Best of all, your wallet is going to be saying “Thank you” too.

The biggest news of the session has to be the passage of HB2404, which after being signed by Gov. Green will comprise the largest income tax cut in state history. The bill will offset the crippling inflation of the last few years and help lower our ridiculously high cost of living.

My colleagues and I at the Grassroot Institute have been advocating tax cuts for as long as Grassroot has existed. When Gov. Green unveiled his tax reform plan last year, we immediately began pushing for its passage. Now, Hawaii will no longer be one of the three worst states in the country for income taxes.

Approved unanimously by the Legislature, this historic tax measure will affect everyone, but it will be especially good for working families. A local family of four making $91,000 a year currently has to pay $5,300 in income taxes. For tax year 2025, that amount will drop to $3,800, and by 2031, to about only $1,600.

That’s a 69% tax cut.

And that’s not all.

The Legislature also unanimously approved SB1035, which will exempt Medicare, Medicaid and TRICARE payments to doctors and dentists from the state general excise tax. The Grassroot Institute issued a policy brief last year about how such an exemption would ease the burden on both doctors and patients, and it’s good to see that the Legislature is listening. Another important healthcare reform was embodied in SB63, which will provide a path for the state to issue temporary nursing licenses. This is a stopgap approach in light of the failure of a bill that would have allowed Hawaii to join the National Nurse Licensure Compact. But it is a step in the right direction, and the legislators who resurrected SB63 deserve praise for finding a way forward.

As for other milestone measures that reached the governor’s desk, two of the most transformative involved housing. Both will help ease the state’s housing crunch, which study after study has shown is directly related to Hawaii’s excessive regulation — the most of any state in the country.

One of these bills, SB2090, passed easily and will expand mixed-use zoning and make it easier for homebuilders to convert underutilized commercial buildings for residential use.

The other bill, SB3202, will let homeowners build two accessory dwelling units on qualifying residential properties, but its passage was not a cakewalk. It encountered controversy and opposition from very vocal NIMBY (not in my backyard) groups.

Working in its favor were a few courageous and tenacious legislators who drew support from a broad coalition of housing reform groups, including Grassroot.

Both bills have been singled out for praise by a national housing advocacy group as the “first major pro-housing reform bills” to be passed by state legislators anywhere in the U.S. this year.

In short, it’s not every year that you see landmark tax cuts and housing reform in Hawaii. But having come through for Hawaii residents this year, the 2024 Legislature deserves our thanks. We also need to thank every Hawaii resident who sent testimony or messages to their legislators this year. The results are proof that your voice matters.

Now, as we prepare for the next legislative session, let’s imagine what we might be able to accomplish in 2025.

Keli‘i Akina is president and CEO of the Grassroot Institute of Hawaii.

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