HSTA proposes increase in taxes to fund schools


POSTED: Thursday, January 28, 2010

The Hawaii State Teachers Association is proposing to increase taxes on upper-income residents to eliminate Furlough Fridays and provide support for public education.

The teachers union planned to introduce legislation yesterday to create two new higher tax brackets for Hawaii residents making more than $200,000 a year. Combined with other proposals that would increase capital gains and corporate taxes, the state would see more than $500 million in additional revenue each year, the HSTA estimates.

“;There's no good solution to furloughs, either this year or next year, without additional funding for the Department of Education. And the only way to do that is to increase revenues,”; said Jim Williams, executive director of the HSTA, which represents about 13,000 public school teachers and librarians.

; Williams said a tax increase would hurt those in higher income brackets less than those who don't earn as much.

Lowell Kalapa, president of the Tax Foundation of Hawaii, said teachers need a lesson in economics.

“;Tax the rich and you drive them out of the state,”; he said.

“;You would think the teachers would have enough intellect to understand the need for investment. Investment creates jobs that their students will need in the future.”; Kalapa said. “;When we lose all of the people who have the money to start our businesses, what are they going to say to their students when there are no jobs?”;

Williams said it's better to raise taxes on those who have the ability to pay than raising the general excise tax, which affects everybody.

“;Right now, the lowest 20 percent of our citizens pay about 12 percent of their income in taxes, and the highest 1 percent pay only 6 percent,”; Williams said. “;And what we're saying is that that highest 1 percent, or even highest 5 percent, are people who have benefited the most from Hawaii's economic growth over the past 10 or 20 years and, by definition, if their income is still at that level, the recession may have dented them, but it didn't hurt them the way it's hurt a lot of ordinary people.”;

House Finance Chairman Marcus Oshiro said he appreciates the idea, but it's too early to say whether lawmakers are ready to support any kind of tax increase.

“;We need to keep our options on the table,”; Oshiro (D, Wahiawa) said.

House members are still learning about the cuts that will be necessary to balance the budget without a tax increase, Oshiro said.

“;There is no free lunch,”; he said.


Star-Bulletin reporter Christine Donnelly contributed to this report.





        The Hawaii State Teachers Association plan to increase income taxes to try to end Furlough Fridays:

» Raise taxes on those making $200,000 to $400,000 to 10.55 percent of their income.

        » Raise taxes on those earning more than $400,000 to 12.85 percent of their income.

        » Tax capital gains at ordinary income tax rates.

        » Repeal tax provisions that allow businesses to take current losses against previous year's profits.

        » Create a $250 corporate minimum tax.

        » Close foreign tax havens.

        » Create a commission to increase school capacity and accountability, and promote student success.

        » Dedicate $300 million of the revenue generated to eliminate furlough days and restore Department of Education funding.