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Legislator offers proposal to raise taxes on the rich


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POSTED: Friday, April 03, 2009

In a plan to balance the state budget, House Speaker Calvin Say is readying a new state income tax proposal: increases for those making more than $150,000 a year.

By increasing the 10 percent income tax lid to 11 percent for those making more than $150,000 and to 12 percent for those making more than $200,000, Say figures that those in lower tax brackets could get a tax cut and the state would still get more money.

Say, a legislative veteran of several budget downturns, said he has never seen an economy as bad as the one now facing Hawaii.

In a wide-ranging interview on Wednesday, Say said the economy “;is not anyone's fault. It is global.”;

The Palolo Democrat is critical of Republican Gov. Linda Lingle, whom he faults for poor planning.

Specifically, Say said Lingle made a critical budget mistake by agreeing to allow the public worker unions to drag out collective bargaining talks until December.

“;I don't know why she said she would delay collective-bargaining arbitration. What are you waiting for?”; Say asked. “;You will already be in the new biennium. I don't know what she is thinking. Our budget is going to be balanced, but what if there is no contract for workers or for the health fund?”;

Say is also looking at a list of 44 state House bills that would balance the budget by dropping state tax credits or cutting state worker benefits.

Also being considered is House Bill 1749, which would net the state about $25 million a year by taxing mutual benefits societies such as the Hawaii Medical Service Association and Kaiser Permanente.

Say also criticized the four county mayors, saying the quartet would be better off supporting Lingle's call to cut public worker salaries.

“;I'm surprised they didn't support her call for salary rollbacks. She is doing them a favor. You can't have it all and talk out of both sides of your mouth,”; Say said.

He complained that the mayors are pleading that the counties continue to keep a portion of the tourist hotel room tax but are not preparing for big budget drops next year when property taxes are expected to fall.

Say, however, is urging that the Legislature reconsider the entire tourist tax contribution to the counties and instead go back to a regular grant process. He also said he would be in favor of allowing the neighbor island counties to raise their own taxes by increasing the general excise tax as Honolulu has done to fund mass transit.

Sen. Fred Hemmings, the Senate GOP leader and another legislative veteran, disagreed with Say's call for any tax increases, saying that raising taxes on upper-income families would hurt the economy.

“;It would be disastrous to raise taxes in these times. This is a wonderful time to take the opportunity to restructure government. We should take it,”; Hemmings said.

Raising taxes would not help the budget, Hemmings said. He urged instead that public worker unions consider furloughs or wage reductions.

“;Hawaii has lost 20,000 jobs in the private sector, and the union leaders should work with us to restructure government,”; Hemmings said, adding that it would be better for public workers to take on more responsibilities rather than see their jobs eliminated.