Honolulu Skyline (Photo courtesy of UHERO)
Honolulu Skyline (Photo courtesy of UHERO)

Hawaii was ranked 46th best – or 4th worst – state in a report entitled Rich States, Poor States, released this week by the American Legislative Exchange Council. The researchers considered various economic outlook ranking variables and came up with the following assessment:

 

1.       Top Marginal Personal Income Tax Rate: 11.00%  Rank: 49

 

2.       Top Marginal Corporate Income Tax Rate: 6.40%  Rank: 18

 

3.       Personal Income Tax Progressivity (change in tax liability per $1,000 of income) $13.22  Rank: 36

 

4.       Property Tax Burden (per $1,000 of personal income) $23.89  Rank: 10

 

5.       Sales Tax Burden (per $1,000 of personal income) $44.68 Rank: 49

 

6.       Remaining Tax Burden (per $1,000 of personal income) $21.68  Rank: 39

 

7.       Estate/Inheritance Tax Levied? Yes Rank: 50

 

8.       Recently Legislated Tax Changes (2010 & 2011, per $1,000 of personal income) $7.21 Rank: 45

 

9.       Debt Service as a Share of Tax Revenue 9.9%  Rank: 36

 

10.    Public Employees Per 10,000 of Population (full-time equivalent) 536.9  Rank: 22

 

11.    State Liability System Survey tort litigation treatment, judicial impartiality, etc.) 56.4 Rank: 35

 

12.    State Minimum Wage (federal floor is $7.25) $7.25  Rank: 1

 

13.    Average Workers’ Compensation Costs (per $100 of payroll) $1.70 Rank:  11

 

14.    Right-to-Work State? (option to join or support a union) No  Rank: 50

 

15.    Number of Tax Expenditure Limits (0= least/worst 3=most/best) 1  Rank: 14

The authors of the report said Hawaii’s economy will improve if Hawaii becomes a “right to work” state, if Hawaii’s personal income tax rate (ranked as the 49th worst) is decreased, if Hawaii’s burdensome estate tax (ranked 50th) is lowered. On the positive, Hawaii ranks fairly well for its property tax burden (10th in the nation) and for keeping a low, competitive minimum wage at the federal floor.

Jonathan Williams, a spokesperson for ALEC, said: “With Oregon reducing their income tax, Hawaii stands alone as the state with the highest income tax in America. Based on our research in Rich States, Poor States, we find the states with the highest income taxes continually lose economic development, population, and jobs to the states with lower taxes. As policy makers look for ways to get Hawaii’s economic outlook out of the bottom 10 nationally, policies that enhance competitiveness will be key.”
See the full report in this PDF here. Hawaii’s state data is on page 68.

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