OK income tax credit with standard deduction
A national survey has determined that Hawaii's taxing of the working poor is second highest in the nation.
HAWAII once again is taking a deserved battering for its harsh tax treatment of the working poor. After tax changes are in place next year, Hawaii will claim the most burdensome tax policy in the nation for low-income working families. That needs to change.
The Washington-based Center on Budget and Policy Priorities released a survey of the 41 states and District of Columbia that have income taxes, ranking Hawaii second-worst to Alabama. Hawaii is on track to become the very worst in some respects with changes scheduled to take effect next year.
The Legislature is considering proposals to increase the standard deduction or create an earned income tax credit at 20 percent of the federal credit. A combination of the two would give a boost to the working poor while providing tax relief to middle-income families.
The Lingle administration opposes the tax credit, although championed during the past three decades by Republican White Houses. Kurt Kawafuchi, the state tax director, says it would affect too few taxpayers, is prone to error and is not user-friendly.
Figuring the credit amount on state tax forms could not be more user-friendly: Simply take the given percentage -- 20 percent or whatever -- of the federal amount.
A state tax commission in December found that 72,000 individual or family tax filers in Hawaii -- 22.3 percent of those with incomes of less than $30,000 -- claimed the federal earned income tax credit. Those are the very families that need help the most.
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