Executive Summary

Hawaiʻi’s taxes pay for programs and services that we all need, from building roads and maintaining parks to constructing affordable housing and climate change-resistant infrastructure. Unfortunately, our system puts a lopsided financial strain on struggling families, while the wealthy continue to receive tax breaks.

In this brief, we look at how Hawaiʻi taxes lower-income residents more heavily in comparison to higher-income residents. Then, we examine options to raise taxes on wealthy residents and corporations, so that they contribute their fair share towards the public good.

Hawaiʻi’s tax system is not progressive enough to compensate for rising income inequality. Several strategies are available to ensure that the wealthiest taxpayers—Hawaiʻi’s 1 percent—pay their fair share. In addition, corporations, which benefit from public investments in education, infrastructure and the environment, are taxed at low rates and contribute little to state revenues.

Strategies covered include:

• Creating a new individual income tax bracket;

• Increasing the capital gains tax;

• Reforming the conveyance tax;

• Closing the estate tax loophole;

• Increasing corporate tax rates; and

• Implementing worldwide combined reporting.