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Capitol View
IF the president-elect can declare he's "a unifier, not a divider," and then nominate an adamant Christian conservative as attorney general, then Hawaii's Republicans and Democrats can also find a strange unity in their different plans to cut our taxes. Both parties have
plans to cut taxesThe Republicans have the high ground because they all agreed to make cutting the excise tax on food and medical expenses a campaign issue.
This year, the tax-cutting theme is like old home week for the GOP, because the Republicans are now arguing for something they had once accomplished.
Cutting taxes always works, and the Hawaii GOP has been standing up to argue against the excise tax on food and medicine for nearly 30 years.
While never seeing their own suggestions adopted by the Democratic majority, the Republicans were able to force the administration and Legislature to change tax policy more than a decade ago.
The result was a system of tax credits, keyed to your income. The less you make, the more tax credits you got for the tax you paid on food.
It was a popular, easy-to-understand tax credit. It was especially appealing because it didn't stop Hawaii from taxing tourists. It is the goal of every elected tax-writer to dream up a tax that someone else pays.
So if you tax everybody for food, but then kick back something to the local folks, only the tourists wind up paying for it.
Of course, this is an excise tax -- not a sales tax -- so the actual cost of the food you buy is going to be a little higher even before the clerk slaps on the 4 percent tax, but that is another economics lesson.
But what the Legislature gives, the Legislature takes away. So when the state budget crashed six years ago, so did the tax credit. "Gimme that money," the state said, and the tax credits were repealed.
Enter the GOP to again holler, "Cut taxes, now!"
Interestly, Lowell Kalapa, Tax Foundation executive director, who never met a tax he liked, is telling the GOP to cool it with the big tax cuts.
Kalapa argues that the state really can't afford the tax cuts. If you take the money out of the state now, you will have to either fire people or stop doing things that the state now does.
"See, didn't we tell you?" the Democrats shout back at the GOP.
Rep. Marcus Oshiro, the new House Democratic leader, says the GOP plan is dishonest. He adds up $300 million revenue lost to the state if the Republican cuts are adopted.
"I can only conclude that either the Republicans don't have a clue as to what they're talking about, or they are cynically playing upon public ignorance of the state's budget details to further their political ambitions," Oshiro said.
REPUBLICANS like Sen. Fred Hemmings promise that the tax cuts will make the government lean and more efficient.
They don't share the Democrats' fears that more tax cuts will slash muscle and bone, not fat.
Here's where the unite-not-divide theme comes in. While the Democrats reject the GOP tax cuts, they are not at all reluctant to suggest their own plan -- those old popular tax credits.
As Oshiro figures, the GOP tax cut would help everyone who pays the excise tax on food. "Tax relief to tourists and other nonresidents," he calls it.
But the tax credits would put real money back in the pockets of Hawaii's taxpayers, while keeping the refunds away from the tourists.
The trick will be for the Democrats to lower taxes while still keeping the already slashed state budget intact.
Richard Borreca reports on Hawaii's politics every Wednesday.
He can be reached by e-mail at rborreca@starbulletin.com