Estate tax giveaway HB2653 would further concentrate wealth, drive inequality
New data-driven policy brief from Hawaiʻi Appleseed aims to educate lawmakers on the true nature of the policy proposal contained in this 2024 bill.
HONOLULU, Hawaiʻi — Introduced in the 2024 legislative session, House Bill (HB) 2653 would dramatically expand the amount of generational wealth that can be passed down tax-free, from the current thresholds of $11 million for married couples and $5.5 million for individuals to $27.22 million for married couples and $13.61 million for individuals. It would also entirely exempt the value of any “family-owned” business from the estate tax, no matter how much it is worth.
With HB2653 on track to enter the Conference Committee phase of the Hawaiʻi State legislative process, no independent, third-party, fact-based review of the policy proposal has yet been publically circulated. To fill that gap in information, Hawaiʻi Appleseed Center for Law & Economic Justice has published a new policy brief, “Concentrating Wealth,” which examines the implications of the proposed legislation on the estate tax liability of the very wealthy families it would impact, as well as the impact on the state’s ability to fund critical needs due to loss of revenue from the proposal.
“Expanding the estate tax exemption is the wrong choice for Hawaiʻi and would curb our ability to combat rising income inequality, while depriving our budget of much needed revenue,” said Devin Thomas, brief author and Senior Policy Analyst for Taxes & Budget at Hawaiʻi Appleseed. “The legislature should instead pursue progressive revenue policies such as closing the loophole in Hawaiʻi’s capital gains tax and raising the tax on the sale of multi-million dollar mansions through the conveyance tax.”
The brief covers several relevant facts about the estate tax and the impact of HB2653:
HB2653 only applies to estates worth more than $27 million for married couples and $11 million for individuals; any estate worth less than that would see no benefit.
Therefore, only the wealthiest 0.2% of estates would benefit from the bill.
Contrary to what the bill’s proponents argue, there is nothing in the language of the bill that requires someone to own or operate a business in Hawaiʻi to benefit from it. Anyone with an estate worth more than $27 million would benefit from this tax break—even someone who lives in Hawaiʻi, but operates a business out of state.
There are no dollar values for the exemption in the bill, making it unclear who this tax is really for.
“This bill has nothing to do with your typical local mom and pop local business that we all know and love,” said Will White, Deputy Director of Hawaiʻi Appleseed. “The $27 million threshold means we are talking about the most profitable, powerful companies in Hawaiʻi. It’s clear from an honest analysis of this bill that it isn't really about preserving local businesses. It's about preserving wealth at the top of the income ladder so the rich get richer.”
Extreme concentrations of wealth, facilitated in part by passing down multimillion dollar estates, goes hand in hand with increasing income inequality. Far from leading to any kind of “trickling down” of benefits from the wealthy to workers and their families, history shows that tax policies favoring the rich hollow out the working class and diminish tax revenue that pays for public programs and services. The estate tax, levied when large sums of wealth are passed from one generation to the next, ensures a more equitable distribution of resources and opportunities for all.
“Rather than cutting millions of dollars out of the estate tax bills of the wealthiest business owners in Hawaiʻi, the state should consider ways to equitably raise revenue to fund programs to help Hawaiʻi’s working families make ends meet, such as free school meals for public school students, a state child tax credit, or a rent relief and mediation fund,” said Gavin Thornton, Executive Director of Hawaiʻi Appleseed.