Wednesday, June 29, 2022
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Cryptocurrency gets 2-year extension, but what will happen after that?

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By Keli‘i Akina

The good news is that Hawaii residents will be able to keep trading in cryptocurrency.

The bad news is that Hawaii’s policymakers haven’t given up the dream of regulating it into oblivion.

For years, Hawaii residents who wanted to buy or sell cryptocurrency were stymied by the state’s Money Transmitters Act, which demands that digital currency companies hold cash assets equal to their digital assets. For example, under this “double reserve” rule, a company with $1 billion in bitcoin and etherium must also have $1 billion in cash reserves.

This double-reserve requirement makes Hawaii one of the most unfriendly states for cryptocurrency, and in 2017 — the same year that the value of bitcoin climbed from $1,000 to $19,783 — exchanges such as Coinbase, Binance and Bitstamp simply stopped doing business here.

Keli‘i Akina

Ironically, during that same year, both the Hawaii Senate and House approved an exemption for cryptocurrency from the Money Transmitters Act, but that exemption was removed in conference committee and never passed. As a result, Hawaii residents were forced to watch rather than participate in the worldwide digital currency boom for the next couple of years.

Finally, in 2019, Gov. David Ige authorized the “Digital Currency Innovation Lab,” a temporary regulatory “sandbox” that allowed certain companies to do business in Hawaii without being subject to the double-reserve requirement.

Since the lab’s inception, 134,000 Hawaii customers have been able to complete more than $800 million in transactions involving cryptocurrency.

With the lab set to end this year, Hawaii policymakers during the latest legislative session faced a dilemma: If cryptocurrency is going to survive in Hawaii, it needs to be exempted from the double-reserve requirement. That small change in the law is all that is required.

But rather than passing a simple bill exempting digital currency from the double-reserve requirement, as contemplated in 2017, the Legislature instead considered a massive 90-page bill that set out an exhaustive program of regulation, licensure and oversight for cryptocurrency.

Cryptocurrency is digital money within the blockchain network such as bitcoin, ethereum, litecoin, dash, monero, zcach and ripple coins.

As the Grassroot Institute of Hawaii pointed out in extensive testimony on the licensing bill, the proposal was fraught with problems ranging from being too bank-centric to issues with privacy and data security.

Eventually, the licensing bill collapsed under its own weight, leaving policymakers scrambling for a solution that would not result in an abrupt end to cryptocurrency in Hawaii.

They ended up approving a resolution asking the state to administratively extend the Digital Currency Innovation Lab project for two years, and a bill to create a task force that will study the issue.

The big question since has been: “What will happen to the sandbox?”

Well, now we know, and cryptocurrency enthusiasts can breathe a sigh of relief: The state Division of Financial Affairs and Hawai‘i Technology and Development Corp. nine days ago extended the sandbox until June 30, 2024, so — for now — cryptocurrency in Hawaii lives.

We must realize, however, that this means there will be even more pressure on the Legislature to come up with a permanent answer. If our lawmakers continue to embrace heavy regulation and licensing schemes, this might be a short respite before cryptocurrency is killed off permanently in Hawaii.

Under the byzantine licensing scheme considered earlier this year, Hawaii would have gone from the worst state in the nation for cryptocurrency to … the worst state in the nation for cryptocurrency, though perhaps slightly better than before.

If only lawmakers would realize that the answer is right in front of them. The sandbox is light-touch regulation in action. All that it does is remove the double-reserve requirement for cryptocurrency.

If the sandbox works — and judging from the pleas for an extension, it clearly does — then why not learn from its example?

There is no need to create a burdensome regulatory scheme when we have proof that a simple, common sense approach is better and more effective.

The clock has been reset for cryptocurrency in Hawaii. Hopefully, policymakers will spend that time wisely and learn the value of light regulation. That way, we could make Hawaii one of the best states for cryptocurrency, rather than one of the worst.
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Keli‘i Akina is president and CEO of the Grassroot Institute of Hawaii.

General Excise Tax on Nonprofits

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Charity and nonprofit organization cartoon banner. Donation box, smartphone, coins and money bills with purse and ribbon. Donate, volunteering help and foundation aid, philanthropy vector concept

Many of us have had the chance to work with nonprofit associations, either as a board member, volunteer, or paid staff.  It isn’t clear to many people how our tax laws, specifically our GET, apply to these associations, so I am presenting a simplified guide to how the GET works.

A nonprofit can earn three kinds of income, which I call green, yellow, and red income.  These three categories cover most, but not all, of the income that a nonprofit can earn.

Green income is gifts, grants, contributions, and membership dues.  Green income is exempt from GET.  This kind of income is exempt from GET because it’s a gift, and it doesn’t matter if the recipient is nonprofit, for-profit, or an individual.  If the donor gets something substantial in return for the contribution, it’s not a gift and therefore not green income.

Yellow income is what some people call “exempt function income.”  To have exempt function income, the recipient must be registered as a tax-exempt organization.  An organization registers with the Department of Taxation on Form G-6, which these days is submitted online.  If the registration is approved, then exempt function income is income derived from the conduct of an activity that contributes importantly to the reason why the organization is exempt.  For example, if the exempt organization is a school, tuition is exempt function income.  If it’s a museum, admission fees are exempt function income.  For a hospital, charges for medical care are exempt function income.

There are further restrictions on some types of organizations.  For example, for a hospital the law says that exempt function income needs to be from the conduct of a hospital “as such.”  There was a court case that decided that if a hospital provides a parking lot for patients and visitors and charges parking fees, the parking fees are GET taxable because, although having relatives and friends visit a patient can make the patient get better faster, a parking lot is not a hospital “as such.”

Yellow income is exempt from GET if all these conditions are met.  This is the kind of income that is reported on the GET return as exempt and is listed in the second column of the return.  Again, an organization can’t have any yellow income unless it is registered on Form G-6 and approved by the State.  A determination letter from the IRS recognizing it as federally tax-exempt is not enough.

Red income is most of the other income a nonprofit receives.  Red income is income from fundraising.  Whether it be a bake sale, benefit dinner, or a silent auction, any income from an activity the primary purpose for which is raising money is GET taxable.

There are a couple of other categories of income that usually aren’t of significance.  A nonprofit earning income from dividends is exempt from GET because all dividends are exempt from GET.  If it earns some interest  from safekeeping funds in the bank, that is exempt because it’s not considered “business” subject to the tax.  If it gets a few bucks by auctioning off used property or other physical assets occasionally, there is a “casual sale” exemption that kicks in.

There are, of course, more complicated nonprofit organizations with different kinds of income.  This article can’t, and doesn’t, cover everything.  It does illustrate that the GET, as applied to nonprofits, is more complex than some folks would care to believe.  We encourage nonprofits to get a qualified tax professional involved if they have some income that they aren’t sure how to report or classify.

Refining Your Henry Rifle with Skinner Sights

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The story begins with the recent acquisition of a Henry Rifle.

In my case it was a “Big Boy” — a 16.5″ carbine chambered in .44 magnum. It’s main purpose is to ring a gong at 100 yards but it would also be ideal for pig hunting or possibly bringing home some venison from the countless Axis Deer that populate Molokai, Lanai and Maui.

Why a .44 rifle? Anyone who reloads can tell you that it’s much easier to reload a handgun round rather than a rifle round. For my purposes the .44 is ideal.

The Henry is reasonably priced, well made, well finished and in my estimation, a more than decent rifle.

However, not everything is ideal.

As I began my research for this article, I discovered a on a blog called Major Pandemic, a moniker that is prescient considering the current situation. (But that’s another story).

The article begins with this insight:

“After you fall in love with a Henry rifle and drop the cash down on your gun dealers counter, the next thing you will start pondering is your love or disdain for the semi-buckhorn sights.”

Amen, Mr. Pandemic.  

I did fall in love with the Henry and per your comment, I’ve never been a big fan of the buckhorn sight. Sure, they were fine when they were introduced in the 1860s, but technology has moved on since Abraham Lincoln was president. Tradition is great but there’s better technology out there.  

Henry H012GR Big Boy Carbine Side Gate 44 Mag 7+1 16.50" American Walnut Blued Right Hand with Large Loop - 619835200426
Reasonably priced, well made, well finished…but I didn’t care for the Buckhorn sight setup.

So what were my options?

I rang my friend Jackie Johnson at Henry Repeating Arms and asked her to recommend sight system that I might swap out for the buckhorn. She immediately replied, “Skinner.” I did a little googling and quickly agreed this was the ticket.

Why?

First and foremost, Skinner makes peep sights, which I find to be superior to just about anything on a rifle. (I’ve used them on an AK and an AR and realized they’d be ideal on the Henry).

Here’s how the method functions:

A peep sight improves a notch-and-post open sight by enhancing your eye’s capacity to see the front sight relative to the target.

How does it work?

If you look through a peephole your vision automatically centers on the front sight. It’s where your focus will automatically go. In other words, it’s a much more intuitive way to acquire a target than a conventional front and rear sight system which in my opinion, takes more brain activity to complete.

Skinner’s rear sight not only functions perfectly as a peep sight its visually pleasing. This is especially true with their with brass components. (Their peep sight is also available in blue steel and stainless). As one reviewer said, the Skinner system looks like it actually belongs on the Henry.

That was an astute comment.

In other words, the Skinner sight blends perfectly with the Henry aesthetic rather than looking like some gratuitous, third-party add-on. (They are also available for every other lever action, Winchester, Marlin, Rossi, etc).

The rear sight was easy to install. No tapping and drilling. What a concept!

All you need to do is remove several screws and pop on the sight. It couldn’t be easier. (See photo at top of the page).

The front was slightly more nuanced.

First, you’ll need to tap out the existing front sight.

Why?  You could conceivably leave the original sight on but Andy Larsson, the owner of Skinner, tells me that there’s a 50/50 chance that the geometry will not work, and you won’t be able to dial your rifle in. Ergo, it’s better to replace the stock front sight with a Skinner.

In my case it took a few tries to get the geometry correct. I ended up with the .625” front sight blade, the tallest they make. Of course, it’s going to vary with the ammo or if you’re a reloader, the load, bullet type etc. I finally got consistent printing with the this blade and the peep site, which is adjustable both for elevation and latitude.  

To remove the front sight, simply put the rifle in a vice and tap out the stock front sight with a brass punch, moving the (dovetail) mounted sight from left to right.

Be careful. It’s easy for the punch to slip. In my case, it happened and I slightly marred the barrel. I touched it up later with a gun bluing pen and no one was the wiser.

Adjusting the Skinner Peep Sight is as easy as loosening up an allen head screw. The Skinner “Express” model melds perfectly with lines of the receiver so it doesn’t look like some third party add-on.

The next step is to tap in the combined dovetail-mounted ramp assembly (right to left). You may have to take off a bit of metal with a triangular file to get it in. Once centered you can cinch the assembly down with a screw in order to gain some purchase on the barrel…or not, in my case.

The next thing to do was to add the new sight atop the ramp. Again, the process should go start on the right hand side. In my case this definitely needed some metal removed from the dovetail. Just take off a bit, a stroke or two from the file at a time. I was able to get it in atop the ramp, but it moved a bit, moving the whole assembly over. No worries. Eventually I was able to center both the sight and the ramp.

Once you’ve added the front and rear sights, tweaking the rear sight at the range is pretty easy.

Just don’t forget to take along the allen wrench, provided by the manufacturer.

Conclusion:  This is straightforward to install and, in my opinion, light years better than the stock Buckhorn system. It’s both easy to look at and use. Prices respectively for blued, brass, black & gold and stainless are $95, $100, $115, $105. This is one investment that’s obligatory and will bring years of enjoyment. There are options for rifles other than lever action.

Visit Skinner at http://skinnersights.com.

The Kansas Experiment:  Ten Years Later

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https://thenib.com/kansas-experiment-brownback-veto/
https://thenib.com/kansas-experiment-brownback-veto/

About ten years ago, the state of Kansas enacted one of the largest income tax cuts in that state’s history.  It came after vigorous efforts by Kansas’ governor at the time, Sam Brownback.  He compared his tax policies with those of Ronald Reagan and predicted that the cuts would be a “shot of adrenaline into the heart of the Kansas economy.”

Since the 2012 tax cut, however, Kansas’s economy lagged neighboring states.  Lawmakers were forced to make huge cuts in vital programs such as Medicaid, education, welfare, court funding, and infrastructure.  In 2017, after slow growth and two downgrades of Kansas’ bond ratings, the state’s Supreme Court ordered that Kansas increase education spending.  And the state legislature reversed much of Brownback’s original tax cut, overriding Brownback’s veto to do it.

In all, the Kansas Experiment, as it was called, was a dismal failure.  Forbes said that “the Kansas template for that approach has crashed and burned.”  It’s easy to wonder whether similar efforts to cut taxes would be similarly doomed.

One feature of the Kansas experiment that is sometimes overlooked, however, is that the Brownback bill included offsets.  It would have increased the state sales tax and would have eliminated many tax credits and deductions.  The legislature, predictably, tossed out the offsets and sent the bill with only the tax cuts to Brownback’s desk, expecting trickle-down economics and similar theories to make the cuts pay for themselves and then some.  But the effect was like pointing a plane’s nose directly at the ground and telling its pilot to land safely.  It’s possible to do it, perhaps, but it takes a lot more work than landing the plane when starting with its nose pointing toward the horizon.

In a recent article, the national Tax Foundation pointed out that since 2012, 25 states have lower income tax rates while four (and the District of Columbia) have higher rates.  (Hawaii was one of the 21 other states that kept its income tax rates the same.)  We aren’t hearing crash-and-burn stories from the other jurisdictions.  Actually, the opposite is true.  As the Tax Foundation observed:

The expectation is that states which cut income taxes raised less than without a rate cut—that was, after all, kind of the point. But it’s impossible to look at the data and see this broad tax-cutting trend as reckless when the 25 states that cut taxes have seen more revenue growth than the five jurisdictions which raised them—driven, no doubt, at least in part by the fact that the tax-cutting states saw 70 percent more population growth than the handful of tax-raisers.

States adopted these tax cuts at different times in the past decade, of course, meaning that neither the economic effects nor the revenue reductions were experienced for identical periods of time, and the cuts varied dramatically in size. Nevertheless, it’s instructive to note that all but one of the 25 states that cut taxes since Kansas have larger budgets, in inflation-adjusted terms, than back then. The outlier is North Dakota, where plummeting oil revenues in FY 2021 (since recovered) caused the state to end the period lower. Tax cuts haven’t starved governments of funding; they’ve involved lawmakers making a conscious choice to return a portion of the state’s revenue gains to taxpayers in the interest of greater tax and economic competitiveness.

Here in Hawaii, we have a tax and economic competitiveness problem.  The problem is evidenced by census numbers and numerous first-hand accounts of folks who simply can’t make ends meet here and felt they had to jump on a plane with a one-way ticket.

Can we get back to economic competitiveness by lowering our massive tax rates a bit?  Twenty-four states did so and seem to have come out okay.  One state crashed and burned, but we can certainly learn from its mistakes.

And then there were 92: Jones Act fleet loses another ship

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* The following news release was issued June 1, 2022, by the Grassroot Institute of Hawaii. It originally said the Jones Act fleet was down to 93 ships, including 56 oil tankers. Those numbers have been updated to reflect the latest figures from the U.S. Maritime Administration, which are 92 and 55, respectively. 
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The retirement of the 37-year-old Houston is a sign that changes are needed so America can rebuild its U.S.-flag fleet and merchant marine

HONOLULU, June 1, 2022 >>  America just lost another ship from its ever-dwindling Jones Act fleet, an oil tanker named the Houston that counted the islands of Hawaii among its ports of call.

According to Grassroot Institute of Hawaii research associate Jonathan Helton, the 37-year-old Houston is now in India to be dismantled for salvage, reducing the number of Jones Act-qualified oceangoing commercial vessels to only 92, down from 257 in 1980.

As Hawaii residents are all too well aware, the Jones Act is that 1920 federal law that requires all cargo transported between U.S. ports be carried on ships that are U.S. flagged and built, and mostly owned and crewed by Americans.

2020 study commissioned by the Grassroot Institute of Hawaii found that the law costs Hawaii residents about $1.2 billion annually, or about $1,800 per average family.

The intent of the law allegedly was to protect America’s maritime industry so as to enhance the nation’s national security. However, after more than a century of such protectionism, America’s oceangoing Jones Act fleet comprises less than 1% of all oceangoing commercial vessels in the world, making a mockery of any claims that America’s merchant marine fleet is protected by the Jones Act.

According to Helton, in his new article “One less Jones Act tanker for Hawaii is signal to lift U.S.-build requirement,” the Houston was a regular visitor to Hawaii. Industry sources say a 9-year-old tanker named the Florida was called on to replace the Houston and has been serving Hawaii about once a month since November. But that still leaves the fleet in general one tanker short.

Last year, there were 17 tanker movements from the U.S. mainland to Hawaii. The Houston completed eight of them, with six other tankers making the remaining nine trips. The Houston also made 17 movements between Honolulu, Barbers Point and other ports in Hawaii.

Oil tankers make up 55 of the 92ships in the Jones Act fleet. Through April 2022, four Jones Act tankers had completed nine movements from the mainland to Hawaii. But with one less Jones Act tanker in the mix, that could result in Hawaii residents paying just a bit more for mainland oil.

The Jones Act prevents foreign-flagged vessels from transporting oil from the U.S. mainland to Hawaii, and that, ironically, has made it cheaper for Hawaii’s sole oil refinery, Par Hawaii, to import oil from foreign oil sources.

In 2014, the Hawaii Refinery Task Force concluded that the Jones Act was a major reason Hawaii is almost wholly dependent on foreign oil, since the cost of importing oil from the U.S. mainland aboard Jones Act tankers — such as the Houston — is more expensive.

In March 2022, President Joe Biden banned Russian oil imports to the United States. At the time, Russia provided about 3% of all U.S. crude oil imports, but Hawaii had been purchasing between a quarter and a third of its crude from Russia in recent years.

Unless Par Hawaii has found some ready foreign alternatives to oil from Russia, then the need for Hawaii to import crude from the U.S. mainland will increase.

With the Houston gone, there is one less Jones Act-qualified tanker on which Hawaii can rely.

Keli‘i Akina, Grassroot Institute of Hawaii president and CEO, said today, “The loss of the Houston is more proof that the U.S.-build requirement of the Jones Act should be lifted, so companies such as Matson and Pasha and other Jones Act carriers can buy and use less expensive foreign-built ships to serve Hawaii’s needs.”

According to Helton, building a tanker in the U.S. costs roughly three to four times more than building one abroad. This, no doubt, weighed heavily on the owner of the Houston, SEACOR Holdings Inc., to not replace it years ago.

Helton concluded that, “If U.S. lawmakers ever hope to enhance Hawaii’s energy security, rebuild the nation’s oceangoing U.S.-flag fleet and revive its merchant marine, they will need to start thinking outside the box.

“So as Hawaii says aloha to the Houston,” he said, “perhaps it is time Congress said aloha as well to the Jones Act’s domestic-build requirement.”

To read Helton’s complete article, go here.

Counties eager to spend like it’s 2019

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By Keli‘i Akina

Hawaii might be recovering from the COVID-19 recession more quickly than anticipated, but that does not mean we are out of the woods. 

Inflation, economic setbacks and a possible recession are reason enough for policymakers to tread carefully when it comes to the budget.

Fortunately, there is a simple guideline that can prevent overspending and debt: The government should not grow faster than the economy.

It’s called the golden rule of spending. Stick to that rule and our elected officials can make sure that our state and county budgets are sustainable. 

Keli‘i Akina

The rule is especially important to remember when you get a sudden infusion of funds, such as relief money from the federal government or a sudden increase in tax revenues for whatever reason. Should you rush out and spend it on every project that makes a case for being worthy? Or do you pay down any outstanding liabilities and prepare for future emergencies?

The right answer should be obvious, but looking at what Hawaii’s counties have been considering doing lately, it appears we need to emphasize the point.

Hawaii’s gross domestic product is down by 4.43% since 2019, yet even as the economy suffers, all four counties seem determined to spend like crazy and expand.

The Honolulu City Council’s fiscal 2023 budget proposes a spending hike of $220 million, a 14% increase since 2019. It also calls for 521 new employees and salary increases of 5%.

On Kauai, county officials are considering a $42 million or 21% spending increase over fiscal 2019. Total salary expenditures would go up by 18%.

On Maui, the Council is proposing a record-high $1 billion spending plan, representing a 27% increase over fiscal 2019. It also is looking to add 232 new employees, an 8% increase.

I am happy to say that the Maui Council did recently lower its tax rates on most categories of property, to account for increased property values — as all counties should. But in general, those reductions will be offset by the other tax rates that were increased, and by its unsustainable spending plan.

Hawaii County, meanwhile, is considering an 18% increase in its annual spending compared to fiscal 2019, with its personnel costs to go up by 2%.  

The point is that no matter how much the counties spend, the money has to come from somewhere. And no matter how they structure it, that money ultimately comes from us.

It could be directly, through taxes on income, property, gifts, inheritance or capital gains. Or indirectly through “the rich,” “the tourists,” “empty rooms,” the gasoline we buy, the food we eat, the liquids we might drink, and on and on. 

Hawaii’s “tax law and rules” are highly detailed and complex. But their effect is simple: They increase our cost of living and crimp our range of economic opportunities, which, along with Hawaii’s high cost of housing, is why so many residents have been leaving the islands in search of greener pastures.

Since 2019, Hawaii’s labor force has declined by 2.8%, to 648,150. Hawaii’s population in general has suffered net losses every year since 2016. Our economy is literally shrinking, yet our counties want to go on spending sprees.

As Grassroot Institute founder Dick Rowland always warned, “When the government gets bigger, you get smaller.”

This is a time for budgetary restraint, not excess. Policymakers at every level must embrace the golden rule of budgeting. Otherwise, they will force even more of our family, friends and neighbors to leave our beloved Hawaii.
__________

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

Transit History

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Park your auto safely at home use the street car service.

This week, I’m going to do something a little different.  I’m going to trot out an analysis that was done by one of my predecessors.  Who and when will be revealed later.  (My comments on how they relate to today’s situation are in parentheses.)

“Rapid transit for Honolulu is the most costly single project ever contemplated by either the State or the City.”  (It still is.  And you would cry if you saw the estimated price tag, which will be revealed later as well.)

The City’s transit consultants were trying to figure out how the State and City were going to pay for their portion of the cost, which at the time was 1/3 of the total price with 2/3 to be paid by Uncle Sam.  (Fat chance of the Feds giving us that much now.)

“The consultants’ analysis of the tax sources prompted them to drop 11 of the possible revenue sources from the original list:  personal property tax (which we still don’t have, thank goodness); tax on parking lots (we do have the GET hitting those); tax on office space (we have the GET on rents, which is almost as good); increase in the public utility franchise tax; privilege tax on telephones (these days even a cell phone seems more like a necessity); excise tax on realty transfer (we now have a conveyance tax which is orders of magnitude larger than it was in those days); increase in charges on licenses and permits (happens all the time these days); increase in tobacco tax (seems to happen often); increase in liquor tax (same); employer tax on the number of employees; and a payroll tax (those would be really bad, but we wonder if minimum wage increases are doing the same thing in terms of economic impact).

“THE EIGHT tax sources remaining and listed in the apparent order of priority of the consultants are:  1) increase the passenger vehicle weight tax (we’ve done that); 2) increase the county motor vehicle fuel tax (we’ve done that, and we are bracing for more, as we reported last week); 3) increase the real property tax rate (we’ve done that); 4) levy a special one-time tax on autos (who’s going to bet that it won’t be one-time); 5) impose a hotel room tax (we did that, starting at 5% and now it’s up to 10.25% plus the counties can add on another 3%); 6) levy an additional sales tax on top of the present 4 per cent (attempted often and failed often, but a county surcharge did pass in 2006); 7) impose a surcharge on income tax (when this piece was written, the top income tax rate in Hawaii was 11%; it since went down somewhat but crept back up again, and our top income tax rate in Hawaii is 11% today as well); and 8) abolish the home owner’s exemption of real property valuations (probably political suicide then as well as now; we wonder what the consultants were smoking).

“Also, the consultants’ report states study is going on in the area of a transit taxing district.  They are studying the feasibility of securing revenues from special transit beneficiaries by taxing their gains due to close proximity to transit stations.  (The Board of Education jumped on this one real fast, establishing an ‘impact fee district’ to let them tax developers in the area, as we reported on a while back.)”

For those of you who were wondering, the original article was written by Fred Bennion, former President of the Tax Foundation of Hawaii, and it was published in the Honolulu Advertiser and Star-Bulletin on June 25, 1972, nearly fifty years ago.  At that time the total project cost of rail transit was estimated at $700 million.  Yes, with a “M,” not a “B.”  In those fifty years, look how far we’ve come!

Or not.

Free-fall – A series of postings offering perspective and commentary on art and global environmental issues

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by Joe Carlisi

The Children Know


Civil authorities have put in place various systems and devices to warn
people of impending catastrophic events. Detection centers can
immediately broadcast across all media to alert the public when severe
and life threatening natural events are about to occur : violent storms,
tornadoes, earthquakes, tsunamis, etc. Sirens, klaxons and alarms sound
in real time. Evacuation mandates, location of shelters, emergency phone
numbers may follow. Uniformed officers are dispatched to direct and
control traffic.

Animals, even domesticated ones can sense approaching natural disaster
long before man’s technical apparatus triggers a warning. Relying on
instinct and feelings, they have already fled to higher ground . . . safer
locations, seemingly having been able to read the (imperceptible to
humans) signs of danger.


Perhaps children have a similar ability. It would help to explain the
significant uptick in mental problems in young people.
The CDC reports:

Depression and anxiety have increased over time.
For adolescents, depression, substance use and suicide are important
concerns. Among adolescents aged 12-17 years in 2018-2019 reporting
on the past year:

15.1% had a major depressive episode.
36.7% had persistent feelings of sadness or hopelessness.
18.8% seriously considered attempting suicide.
15.7% made a suicide plan.
8.9% attempted suicide.
2.5% made a suicide attempt requiring medical treatment.

These statistics were compiled in 2019 and do not reflect substantially
higher incidences occurring now, post covid.

Of course, children have exposure to the same grim media coverage of
pandemics, climate change, extinction, war and overall meltdown of the
world around them as adults . . . but not as much. They have not had the
years of relentless, numbing programming with which the adult human
herd has been bombarded and shaped. Their instincts and feelings have
not yet been completely eliminated and shut off. They still have the
ability to perceive and act directly through them. What they perceive is
the unfiltered, real extinction scenario that prevails.

Renowned Swiss psychologist, Roger Piaget observed that cognitive
development in children occurs through a series of orienting responses.
When a child perceives something new . . . unknown, for which he/she
has no prior cognitive experience or action response, a pause occurs . . .
a moment of internal silence . . . and the new element registers and is
added to what Piaget called the child’s schema, or stored cognitive items
much like an action database.

Adults are generally incapable of this maneuver because they are so
programmed with acceptable rational explanations that allow them to
perceive the world only through the largely fictional lens of the herd
program. New, incoming perceptions that do not fit the template are
summarily dismissed as fantasy, tricks of the mind, etc. They are literally
blinded and severely limited in their ability to act on the basis of novel
input by their filtering system of beliefs. If it doesn’t match pre-existing,
acceptable explanations then it simply doesn’t exist!

Sometimes the filter is penetrated or bypassed by a powerful, unexpected
perception. It sneaks through before the filtering mechanism can
assemble and floods the cognitive framework. A pause . . . a shock to
the system . . . a brief moment of internal silence . . . a moment of
cognitive dissonance occurs. An orienting response. A new cookie in the
jar.

Sometimes a work of art can provide the jolt.

Carnaval
Although lost in the frenzy and exultation of the moment, the celebrants
know . . . they know that it is the end . . . the party is over. Their backs
are turned to the enormous wave that is about to engulf them . . . but
they can feel it with all of their senses. The wolf whose instincts are
sharpest has already taken the highest position.
Free – fall

***********************

Joseph Carlisi – Biography     

Born and raised in New York City, he earned BA and MA degrees in Philosophy at Hunter College of the City University of New York and then continued his graduate studies in Philosophy and Artificial Intelligence at Massachusetts Institute of Technology working under the mentorship of Marvin Minsky. Joseph worked as a part time content and copy editor for Harvard University Press (science and medicine) while attending M.I.T.     

After ten years as a university lecturer, researcher and administrator, he started and managed an advertising / public relations firm in San Diego, CA that handled a wide range of commercial accounts. On the academic side, he published a series of seven articles on animal behavior for Harvard Magazine and two books: “A Guide to Personal Power” and most recently “Playing God on the Eve of Extinction”.

Joseph Carlisi creates oil on canvas paintings that can be described as vivid, surreal and unexpected. His paintings have been exhibited and sold in: Honolulu, Los Angeles, Las Vegas, New York City, Miami, Tokyo, Yokohama, Amsterdam, Berlin and Salvador Brazil.

Joe’s art is available for purchase.

Contact him at carlisijoseph@yahoo.com.

Civic involvement is key to saving Hawaii

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Photo by Charley Myers

By Keli‘i Akina

One thing I`ve learned from talking to people around the state is that Hawaii’s residents care about the future of our islands — and they have a lot of questions for our elected officials. 

This week, the Grassroot Institute of Hawaii hosted a series of legislative wrap-ups on Oahu, Maui and Hawaii island. Joining me at the events were my institute colleagues Joe Kent, executive vice president; Malia Hill, policy director; and Ted Kefalas, director of strategic campaigns.

Keli’i Akina

At every stop, people were eager to learn more about the institute’s efforts to reform the state’s emergency powers law; reduce barriers to housing; bring taxes, debt and state spending under control; liberalize the state’s cryptocurrency laws; and affect many other issues considered at the recently concluded state legislative session.

Several people asked whether the emergency powers reform bill now on Gov. David Ige’s desk would be sufficient to protect our constitutional rights. 

Malia explained that SB3089 — if enacted into law — would go a long way toward restoring Hawaii’s constitutional balance of powers, thus ending the governor’s ability to extend states of emergency virtually forever — as he seemed to be doing over the past two years with the COVID-19 lockdowns.

The bill is not perfect, but it would give the Legislature the power to end an emergency by a two-thirds vote, require justification for the suspension of any laws and add protections in particular against the suspension of the state’s open-records law. 

On Maui, one attendee asked how we ended up with so many barriers to the creation of new housing. The short answer is that good intentions do not always equal good policy, and good intentions explain why we are bound by so much red tape today. 

In the absence of a better understanding of simple economics — which apparently isn’t so simple for some people — we now have layers upon layers of land-use regulations and zoning laws at both the state and county levels. We have, in fact, one of the most burdensome regulatory schemes in the nation, with an approval process that can take homeowners and developers fully a decade to navigate. 

The questions we received reflected a significant local enthusiasm for zoning reform and an end to NIMBYism, and I hope policymakers have noticed that enthusiasm too.

On the Big Island, we were asked about the accounting shenanigans of the state that emphasize its revenues and downplay its $42 billion of debt and unfunded liabilities. Joe explained that too many of our legislators view the budget like a checkbook, paying attention to only what goes in and what goes out. They ignore the state’s long-term debts, such pensions and healthcare, so as to present a sunnier picture to the public than is warranted.

As you may have guessed, these were not softball questions. I am particularly grateful to the attendee who challenged us on the issue of Hawaii Tourism Authority funding, making the case for a future for the HTA.

Our position has been that the tourism industry is more than capable of funding its own promotion, and that the $60 million the Legislature allocated to it this year could be put to better uses, including opening the door to a tax reduction. 

More important, the funding was approved through the use of “gut and replace,” a practice that denies meaningful public input. It also is a practice that the Hawaii Supreme Court overturned just six months ago. On that basis alone, the HTA funding should be vetoed.

Nevertheless, the question did give us a chance to affirm that we do support tourism in general, and it opened a necessary discussion on what role the government should play in tourism management and promotion.

No matter what the topic, all of the questions we received were thoughtful and interesting. But the ones that really touched me were about how people can get more involved in Hawaii’s political process. On every island, in every audience, were civic activists looking to make a difference in their communities and asking what they could do next.

It was exciting to witness that energy and know that so many people are getting engaged with state and local politics. There is always something that you can do to be heard, whether it’s writing to your legislator or the governor, writing a letter to the editor of your local paper or organizing a community effort to reach out to elected officials.

As Ted explained, politicians pay attention when they get sincere, original feedback from their constituents. 

We love that there are so many people looking to be more active in support of liberty and economic freedom. I want you to know that the Grassroot Institute is here to support those efforts however we can, whether through research, outreach tools or events like our legislative wrap-ups.

Keep sending questions, challenging us, supporting us. Together we can achieve a happier and more prosperous Hawaii. 
__________

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

If You Think Gas Prices Are Bad…

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Many of us who drive cars now dread the day when we’ve got to go to the gas station. Between COVID-19, Russia vs. Ukraine, and other economic factors, gas prices have already passed the $5 per gallon mark and don’t appear to be falling anytime soon.

What we might not know, however, is that there are a lot of different taxes that go into the price at the pump.  Just looking at those imposed at the state and county levels , we start with the state fuel tax of 16 cents per gallon. Then there is a county fuel tax on top of it. The cheapest county fuel tax is here in Honolulu at 16.5 cents per gallon, and it goes up to 24 cents per gallon on Maui.

Then there is a component called the barrel tax, which is imposed on any imported fuels. Its official name is the environmental response, energy, and food security tax, and it is imposed at $1.05 per barrel. A barrel is 42 gallons so that works out to 2.5 cents per gallon.

And finally, of course, we can’t forget our state GET, the general excise tax, at 4% of the sales price, to which is added another 0.5% in all counties other than Maui. With a $5 per gallon sales price as an example, this adds another 22.5 cents per gallon.

That brings us to about 57.5 cents per gallon, just in state and county taxes, so far.

At our legislature, there is a fair number of people who think that gasoline taxes need to be raised, big time, to combat the environmental threat posed by fossil fuel burning. That’s why in the past few sessions they had proposed a “carbon tax” to pay for the societal costs of pollution, global warming, and so forth. In this past session, the bill was House Bill 2278.  That bill proposed to change the barrel tax for gasoline to $5.27 per barrel initially, increasing in phases to $33.16 when fully phased in. That translates to 12.5 cents a gallon initially and 79 cents a gallon when fully phased in. That would change the state and county tax on a gallon of gas from 57.5 cents to $1.34 a gallon, at least, if adopted and fully phased in.

And, of course, there are those who don’t think an increase of this magnitude is enough.  The carbon tax proposed by House Bill 2278 started off at about $14 per metric ton of CO2 and increased to about $89 per metric ton, using the conversion factor (per the EPA website) of 0.00887 metric tons of CO2 per gallon of gasoline.  Various groups have suggested that a higher tax would be needed to drive compliance with the state’s net zero emissions goal by 2045.

In the meantime, the Department of Transportation hasn’t given up on its proposed Road Usage Charge, a project to distribute the cost of road maintenance more equitably among the users of our state’s highways and byways.  The project has been proceeding under the assumption that the road usage charge would replace the fuel tax.  But a road usage charge bill introduced this session, Senate Bill 3313, proposed the road usage charge on top of the fuel tax for electric vehicles, instead replacing the special $50 motor vehicle registration fee for those vehicles.  That bill died this session, but it or something similar could always be introduced next year.  Road usage charges, unfortunately, represent another possible revenue enhancement (translation:  “higher tax”).

Hmm, that bicycle in the window is looking pretty good right now!