Residents of Hawaii face severe economic barriers to attaining and maintaining self-sufficiency. Our state has the highest cost of living in the United States.
The monthly food cost alone for a family of four in Hawaii is 61 percent higher than on the mainland. The cost for shelter is also the highest in the nation; 75 percent of those living at or below the poverty level spending more than half their income on housing.
In addition, Hawaii residents earn the lowest adjusted incomes in the country. This dilemma, often called the “Price of Paradise,” has a particularly harsh effect on those living in poverty.
The Hawaii Appleseed Center for Law and Economic Justice on Jan. 15 released a report entitled “Tax Policies That Will Help End Poverty for Hawaii’s Lowest-Income Families.” Click HERE to read the full report.
The LEJ report notes that Hawaii is one of only 15 states that levy income tax on families earning minimum wage and one of only four that taxes those living below the poverty level. The aggregate state and local tax rate for our low-income population is the sixth highest in the nation. In other words, Hawaii requires its poorest taxpayers to spend more of their household budgets on state and local taxes than the vast majority of states.
The report recommends the state adopt two tax measures to address the needs of low income individuals and families, both of which put money directly back into the pockets of those low-income wage earners who need it most:
- A refundable Hawaii Earned Income Tax Credit fixed at 20 percent of the taxpayer’s federal refundable earned income tax credit.
- A non-refundable credit to eliminate income tax on the poor, a Hawaii Poverty Tax Credit, that would eliminate state income taxes on families whose adjusted gross income is below the applicable federal poverty level and reduce by 50 percent the state income tax on families whose adjusted gross income is between 100 and 125 percent of the applicable federal poverty level.
“Adopting a Hawaii EITC and a Poverty Tax Credit program will go a long way to helping our low income citizens who are facing a daunting struggle to escape poverty,” said Victor Geminiani, LEJ executive director.