Struggling to Make Ends Meet: The Need for a Working Family Credit

March 2017

Executive Summary

Hawaiʻi has the lowest wages in the nation after adjusting for our cost of living, which is the highest in the nation. We also place the second highest tax burden in the country on our lowincome families: our lowest-income households pay over 13 percent of their income in taxes, while those at the top pay 8 percent or less. As a result, almost half of our state’s residents are living paycheck-to-paycheck.

We can help our struggling neighbors keep more of their hard-earned money by reducing their tax burden. Hawaiʻi already has some tax credits for low-income households, such as the Food Credit and the Renters’ Credit, but their values have been eaten away by inflation. Another way to help is by creating a Hawaiʻi Working Family Credit, based upon the successful federal Earned Income Tax Credit (EITC), which is also targeted at low- to moderate-income working households.

This report summarizes findings from the Hawaiʻi Appleseed Center for Law & Economic Justice and QMark Research poll conducted in 2016 that looked at the financial situation of our state’s residents as well as their opinion of tax credits for working-class families, especially the EITC.

Since the 1970s, the federal government has provided much-needed support to working families through the Earned Income Tax Credit (EITC). The survey showed that significant numbers of Hawaiʻi residents have qualified for this important program, with 24 percent of all respondents having qualified for the EITC at some point in their lives.

This number was higher among certain groups. One-third of those with at least one child currently living with them had qualified, compared to one-fifth of those without children had qualified. Over one-third of Native Hawaiians, one-quarter of Caucasians, and nearly one-fifth of Japanese had qualified for EITC at some point in their lives.