Hawaiʻi coalition calls for tax fairness for local needs

As Hawaiʻi struggles to meet growing needs in housing, education, health care and climate resilience, a broad coalition of community groups, labor unions and nonprofit advocates is pushing lawmakers to confront a long-standing question: how to pay for it.

The Hawaiʻi Tax Fairness Coalition today will officially launch its 2026 “Fund Our Future” campaign, a statewide effort aimed at reforming what advocates describe as one of the most regressive tax systems in the nation. The campaign argues that Hawaiʻi’s current structure allows the wealthiest residents and large corporations to pay a smaller share of their income in taxes than many working families—limiting the state’s ability to invest in essential public services.

Organizers say the campaign is about building public support for policy changes that would shift the tax burden away from low- and middle-income residents while generating revenue for long-standing community needs.

According to Will White, executive director of Hawaiʻi Appleseed, the state’s tax system is “upside down,” meaning lower-income households pay a higher share in taxes than wealthier households. Data from the Institute on Taxation and Economic Policy, or ITEP, shows that the lowest 20 percent of earners—those making under $21,000 a year—pay roughly 14 percent of their income in taxes; while the top 20 percent—earning over $136,000 annually—pay about 11 percent. Many attribute this imbalance largely to Hawaiʻi’s heavy reliance on flat, regressive taxes like the General Excise Tax, which they say takes a proportionally larger bite from low-income households than from those at the top.

White emphasized that fair taxation isn’t just a moral issue, but a practical way to ensure Hawaiʻi can fund essential services.

“Tax fairness means those with more pay more,” he said, noting that asking households earning over $500,000 a year to contribute their fair share is “not only responsible—it’s smart.”

White highlighted capital gains as a key target, explaining that taxing investment income at the same rate as wages would largely fall on the wealthiest households, since “over 68 percent of capital gains income goes to households earning over $400,000 per year.” He added that Hawaiʻi’s current preferential treatment of capital gains, with a top rate of 7.25 percent compared with 11 percent for wage income, allows wealth to accumulate at the top, exacerbating inequality and limiting the state’s revenue potential.