Lawmakers resist tax cuts at their own peril
Governor Lingle is again pushing the Legislature to change state income tax laws.
AS the end of the legislative session nears, state Democratic lawmakers are sounding less than resolute about reducing taxes. With a revenue surplus that has grown to more than $600 million, taxpayers had anticipated more than the "token relief" one Republican senator predicts
Significant changes to tax laws are long overdue. Among them are an increase of the standard deduction, which has not been altered since 1989, an expansion of tax brackets and creating an earned income tax credit to help low-income families.
All of these proposals remain on the table, but legislators say increased demands for funds for state programs must be considered before they take up tax cut measures.
Placing taxpayers at the end of the line is a dicey political proposition in a year when most lawmakers will be seeking re-election. Democrats may feel invulnerable, but they should keep in mind that with expenses -- from gasoline and utility bills to housing and food -- rapidly escalating, voters may soon reach a tipping point. Even with a robust economy, wages and salaries aren't keeping up with the cost of living.
Governor Lingle, hoping to prod the Legislature, has repeated her call for reductions, but lawmakers have ignored her before and still don't seem to be listening. They would be mistaken to think that her words do not reflect the sentiments of the public.
Administration officials say legislators could choose approval of the earned income tax credit as a ploy to demonstrate their concern for the working poor. No doubt the estimated 72,000 taxpayers who would benefit would be pleased.
All the same, the two other proposals also are needed to provide broader assistance.
According to Tax Director Kurt Kawafuchi, increasing the standard income tax deduction to 75 percent of the federal level would ease the burden on some 375,000 Hawaii taxpayers. Expanding tax brackets would help about 80 percent, or about 472,000 taxpayers.
Lingle also has proposed a refund of $100 per person for taxes paid on food, medical care and non-prescription drugs and a $150 per person rebate, but as welcome as the cash would be, the one-time returns aren't a permanent fix.
At the start of the session when the surplus predictions totaled $574 million, the Legislature was inundated with funding requests and taxpayers were willing to put money into public school and University of Hawaii improvements. Since then, damage from a stretch of bad weather has required emergency appropriations, but the surplus forecast also has grown to $634 million.
The abundance should be enough to give taxpayers a deserved break.