Hawaii Pensions Should Not Be Taxed

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Representative Barbara Marumoto
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Representative Barbara Marumoto

BY BARBARA MARUMOTO – I am opposed to SB570 HD1, which among other things imposes a tax on pensions.

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Our senior citizens are apprehensive.  Those planning their futures are nervous.  Military retirees are wary.  This bill will disrupt their financial planning and pull the rug out from under their   their lives.

When this body first entertained the idea of taxing pensions, it was suggested that we tax individuals with an adjusted gross income as low as $37,500. At the time, I called the idea “almost cruel.”

The measure before us taxes pensions at the threshold of $100,000 and higher to make the bill more palatable to retirees. However, my concerns remain the same, and they are best stated in the testimony provided by Ms. Barbara Kim Stanton of AARP who said this bill could be a “foot in the door that will lead to taxing pensions of seniors at moderate and lower income levels, sooner rather than later.”

If we pass this measure, we will have our “foot in the door” to start taxing the pensions of all our seniors. We may end up taxing pensions at $10,000 or $5,000 or maybe at no threshold at all. If we returned to the Governor’s original proposal of a $37,500 threshold, it will be harmful to our low-income seniors.

The House Finance Committee has even considered a proposal to tax a minimum amount of each pension to avoid an unattractive feature of this bill – the income trigger.  In other words, those who make $99,999 are safe from pension taxation, but should they make $1 more, their pensions are taxed.  The person making $100,000 will realize less income after taxes than the person making $1 less!

My point is that the fluidity of this measure is disconcerting. As I’ve said before, seniors are quaking in their boots.  I understand that the pension bill we sent to the Senate has been modified to tax pensions of $100,000, not adjusted gross incomes of $100,000.

Very few people have such large pensions, but with income and pension figures wildly fluctuating, seniors don’t know what to expect. They are at the mercy of the conference committee, and we all know that those who have voted no on bills are not allowed to serve on conference.  So since I have been voting no against a tax on pensions, I will not be able to weigh in on this measure.  Only those who have voted yes on this bill will be selected.

Will the income trigger go up or down?  Will the $100,000 go up or down?  Will only $100,000 + pensions be taxed?  Will the first X amount of every pension get taxed?  Where this elevator stops, nobody knows.  This situation gives retirees absolutely no assurance of safety.   For this reason, and for many other reasons, I ask the conference committee to strip the pension tax out of this bill and my fellow lawmakers to join me in voting no on Senate Bill 570.

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