The following testimony was submitted by the Grassroot Institute of Hawaii for consideration on Feb. 2, 2022, by the Senate Committee on Ways and Means.
To: Senate Committee on Ways and Means
Senator Donovan M. Dela Cruz, Chair
Senator Gilbert S.C. Keith-Agaran, Vice Chair
From: Grassroot Institute of Hawaii
Joe Kent, Executive Vice President
RE: SB3100 — RELATING TO CONSTITUTIONAL TAX REFUND FOR RESIDENT TAXPAYERS
Dear Chair and Committee Members:
The Grassroot Institute of Hawaii would like to offer its comments on SB3100, which would create a one-time tax refund for resident taxpayers in keeping with Article VII, Section 6 of the Hawaii Constitution.
The state of Hawaii is currently enjoying a $3 billion budget windfall, thanks to higher-than-expected tax revenues and an infusion of federal funds.
Hawaii’s residents and businesses, on the other hand, are struggling to rebound from the pandemic and lockdowns, which closed many businesses forever and continue to reverberate through the economy.
Under the circumstances, it seems clear that returning a portion of those excess funds is both compassionate and economically wise. Hawaii’s taxpayers would benefit from the tax refund, and the economy would benefit from the spending and investment that will follow.
Earlier this year, the Grassroot Institute wrote about the budget surplus in the Hawaii Filipino Chronicle, suggesting that the Legislature return some of the windfall to taxpayers, as provided in the Hawaii Constitution. We also suggested that the Legislature help alleviate the state’s high cost of living by cutting taxes, which the state can clearly afford.
When Gov. David Ige proposed that the state send refunds in the amount of $100 per taxpayer and dependent, the Grassroot Institute praised the suggestion, noting that this is a good way to help working families while boosting the economy.
We commend the Legislature for considering this bill and applaud its purpose, but we would like to suggest that the Legislature go even farther in this effort to help Hawaii taxpayers.
Currently, the bill sets the refund amount at $100 multiplied by the number of qualified exemptions to which a taxpayer is entitled. Given that one refund is to be distributed to each resident taxpayer who files an individual income tax return for 2021, this is an attempt to approximate the governor’s goal of $100 per taxpayer and dependent, or $400 for the average Hawaii family.
The governor hoped to add about $110 million to the economy via the refund. However, we suggest that, given the amount of the budget surplus, the state should seek to return at least one-third of the windfall, or about $1 billion, to the taxpayers. That would equal approximately $1,361 for each of Hawaii’s 734,673 taxpayers.
The state can afford to do more for Hawaii taxpayers, who have gone through so much in the past two years.
We urge the committee to consider increasing the amount of the refund contemplated in this bill. By doing so, you would help foster economic growth and greater prosperity in Hawaii.
Thank you for the opportunity to submit our comments.
Executive Vice President
Grassroot Institute of Hawaii
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