Tax burden heavy on low income earners
Updated On: Apr 07 2014 06:54:10 PM HST
Many Hawaii residents may dislike seeing a sizeable amount of their paychecks going to taxes, but for those earning the least the tax burden just may be the biggest.
"People in the lowest 40 percent of income are paying about 13 cents per dollar. People in the top 20 percent are paying about 8 cents per dollar," said Hawaii Appleseed Center attorney Victor Geminiani.
Hawaii's general excise tax may be partly to blame, as every good or service is taxed.
Those living at or near poverty also miss out on many tax breaks that others, like homeowners, are able to use.
Low income renters may qualify for a refundable tax credit of $50 for each exemption. They may also qualify for a GET food and excise credit of $85.
Those amounts haven't been adjusted for inflation for years. If they were, Hawaii's lowest-earning households could keep hundreds more in their pockets.
What else could be done to cut the tax liability of low wage earners? Other states have tax credits for low wage earners or a local form of the federal earned income tax credit.
That would cost Hawaii millions in revenue, but Geminiani says it could end up saving the state more, because raising their buying power could reduce the need for expensive state services.
"Why are you spending all that money at the same time taxing them deeper into poverty when the goal is to get them out of poverty?" asks Geminiani.
There are a number of bills still alive in the legislature that would boost current tax credits and add additional benefits for Hawaii's lowest wage earners.
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