A bigger tax refund would help workers and their families thrive
Two new policy briefs focus on the social and economic benefits of a tax system that bolsters Hawaiʻi’s working families—especially those with children—through the smart use of tax credits.
HONOLULU, Hawaiʻi — Following the legislature’s commitment to help Hawaiʻi’s workers make ends meet, two new policy papers show the social and economic benefits of improving the state’s tax credits. These improvements could result in bigger tax refunds for working-class families, which would help hundreds of thousands of keiki, kūpuna and working people.
Two new policy briefs, published by Hawaiʻi KIDS COUNT, focus on the implications of increasing state tax credits for low- and middle-income families. The research shows that these families generally spend most or all of these tax credits on basic necessities within the local economy.
That’s important for state policymakers to know, because one of the best economic stimulus strategies available at state-level government is to put more money back into the pockets of low- and middle-income families. For example, the Earned Income Tax Credit (EITC), a special credit for low- and middle-wage workers, generates $1.24 in economic activity for every dollar distributed to its recipients.
For families with children, the benefits of the EITC and other tax credits like the Low-Income Renters Credit and the Food/Excise Credit cascade and spill over into better health outcomes, better educational attainment, and higher lifetime earnings, extending the societal benefits of these investments far into the future.
“Targeted tax relief helps families make ends meet, and it’s a step toward ensuring all children have an equal opportunity for a bright future,” said Deborah Zysman, executive director of Hawaiʻi Children’s Action Network, which leads Hawaiʻi KIDS COUNT. “Improving these tax credits will benefit our entire community and economy.”
The first brief, “Tax Credits as Tools to Advance Prosperity,” provides an overview of the state’s tax credits, their purposes, and who benefits from their distribution. It also provides recommendations for policymakers to maximize the effectiveness of tax credits going forward.
The second brief, “Refunding Hawaiʻi,” provides a deep dive into the role of the EITC specifically. It also outlines why policymakers should make this credit permanent and expand access to the lowest-income families who currently cannot take full advantage of its benefits, despite having the greatest need.
“Our state tax system is upside down, making low and middle income workers pay a higher share of their income in taxes relative to the wealthiest households,” said Will White, director of the Hawaiʻi Budget & Policy Center, a partner in Hawaiʻi KIDS COUNT. “Expanding the EITC and other credits for working families is a common-sense reform our state can make to help correct an inequitable tax code.”
###
Hawaiʻi Children’s Action Network (HCAN) is a 501(c)(3) nonprofit and the only one in the state of Hawaiʻi solely committed to advocating for children. We address the root causes of poverty and inequity and develop public policies that help children and their families. Our Mission: Build a unified voice educating and advocating for Hawaiʻi’s children. Our Vision: All of Hawaiʻi’s children are healthy, safe and ready to learn.
The Hawaiʻi Budget & Policy Center (HBPC) is a program of Hawaiʻi Appleseed Center for Law & Economic Justice. Our mission is to ensure that our state and local economic policies increase opportunity for all residents. We do this by analyzing and understanding the implications of tax and budget decisions and making sure that the public and policy-makers are informed through strategic communications, coalitions, and key partners. HBPC’s work is guided by the belief that government at all levels should play an active role in helping people reach their full potential.
Hawaiʻi Appleseed is working to build a more socially just Hawaiʻi, where everyone has genuine opportunities to achieve economic security and fulfill their potential. We change systems that perpetuate inequality and injustice through policy development, coalition building and advocacy.
