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Oahu renters
pay more taxes
than most in U.S.

The overall burden reflects
the state's high taxation

By Tim Ruel
Star-Bulletin

Honolulu's renters have a higher overall tax burden than those in most major U.S. cities, in stark contrast to local homeowners, who pay less in taxes than most cities, a management consulting company says.

A Honolulu family of four with an income of $60,000 pays $14,543 a year in total taxes, or 24.2 percent of their annual income, if they rent rather than own a home, according to a Runzheimer International study.

Honolulu's high taxes on renters reflects the overall level of taxation in Hawaii, Runzheimer Operations Director Art Balicki said today.

Hawaii's state income tax is about 10 percent for those whose income is more than $41,000 a year.

The only cities higher than Honolulu in tax burden for renters are Louisville, Ky., Washington, D.C., and Philadelphia.

A study released earlier this month by Rochester, Wis.-based Runzheimer, however, showed Honolulu's homeowners pay less taxes than in most cities.

Honolulu's tax burden for the same-size family, came to $12,679, or 21.1 percent of their $60,000 annual income, if they owned their home, the earlier survey said. That put Hawaii at No. 42 out of 51 cities and well below the tax leader, New York, where home owners pay $16,362, or 27.3 percent of their income, in taxes.

Oahu home owners pay less because they face the lowest property tax rates in the country, Balicki said. Property taxes are lower because public maintenance costs aren't as high and the school system is run by the state.

Owners also fare better than renters because they can deduct the mortgage interest payments on their tax returns, Runzheimer noted.

For the renter, Anchorage, Ala., has the lowest overall tax burden: $10,145 or 16.9 percent of total income. Anchorage has no state, local or sales taxes. It was followed by Manchester, N.H., and Miami on the low end.

In its analysis, Runzheimer used the standard federal tax deduction of $7,350 rather than itemized deductions, because the tax liability was lower, Balicki said.