A Fairer Tax Code for a Thriving Hawaiʻi
Progressive Revenue Options to Protect and Invest in Our Future.
Introduction: A Thriving Hawaiʻi
Hawaiʻi stands at a crossroads. The path we choose now will define our islands for generations. We can either accept a future of diminishing public goods and deepening inequality, or we can choose to build one of shared prosperity and collective resilience.
This choice hinges on a fundamental question of values: who pays for the society we all share? A just future—one with quality education, affordable housing, reliable healthcare, and climate-resilient infrastructure—requires a fair and adequate investment from all—especially those who have benefitted the most.
Our current tax code, however, asks less from the wealthy and powerful, leaving working families to shoulder a disproportionate burden and starving our communities of the resources needed to thrive. To build the Hawaiʻi we believe in, we must reform our tax system to ensure everyone pays their fair share.
This imperative for equitable and sustainable revenue has become urgently practical. Due to the 2025 federal budget bill, HR1, Hawaiʻi is facing the loss of hundreds of millions of dollars in federal funding over the next few years. This will leave funding gaps throughout the state budget, especially with Medicaid and SNAP. In addition to these cuts, the bill provides $491 million in federal tax cuts to Hawaiʻi’s wealthiest residents.
These federal cuts come on the heels of Hawaiʻi’s historic income tax cuts that were passed in Act 46, Session Laws of Hawaiʻi 2024, which will eventually cost the state over $1 billion a year in tax revenue.
The state has three options to address these issues:
Cut services;
Issue additional general obligation bonds (pass the costs on to future generations); or
Find other sources of revenue to continue supporting the programs and services that many local residents depend on.
For thousands of Hawaiʻi’s residents, Medicaid and SNAP benefits are a matter of survival. We cannot abandon our friends, family, and neighbors who need this support now more than ever. Future generations have already been asked to shoulder the consequences of many past decisions. This is a problem we can solve now.
Given that Hawaiʻi’s tax system is regressive (meaning lower-income residents pay a higher effective tax rate than higher-income residents), we recommend legislators balance the state’s upside tax system by asking the wealthy and corporations to pay their fair share.
Doing so is a practical investment in our collective future—a future that should be full of opportunity and success for all of Hawaiʻi’s people, not just a privileged few.
