HONOLULU (KHON2) — They’re called capital gains. Investments like real estate, art or stocks and bonds.
Currently, they’re taxed at a lower maximum rate of 7.5% than your average income in Hawaii at 11%. A new bill in the state legislature is looking to tax these investments like any other wage.
Get Hawaii’s latest morning news delivered to your inbox, sign up for News 2 You
One of the bill’s authors said that it is a loophole for wealthy people to avoid tax rates that working families pay.
“The capital gains tax break is a break specifically for wealthy individuals.,” Rep. Jeanne Kapela (D) said. “It is for people who are making over half a million dollars a year and using that surplus money to invest in more art, to invest in more real estate, to take away the access to housing and drive up our housing costs,”
But, opponents said the rate hike will hurt investment.
“This bill would be devastating to savings and investment in our state. It would basically increase the capital gains tax rate to 11% up from 7.25%. That’s a 50% tax hike. And, that’s going to affect a lot of people who are trying to save in Hawaii,” Grassroot Institute of Hawaii executive vice president Joe Kent said.
Rep. Kapela said the increased rate could generate $90 to $130 million each year in tax revenue for the state.
“I would love to see that pay for a child tax credit, which would cost our state close to about $80 million a year to make sure that similar to what the federal government did and joining the 13 other states who have already done this, ensuring that families are getting that monthly payment to help pay for whatever it may be, whether it’s extracurricular programs for your kids, your football, ballet or dance lessons. Or, it’s paying for food and electricity,”
Kent said the state doesn’t need more revenue.
Get news on the go with KHON 2GO, KHON’s morning podcast, every morning at 8
“When we have a $2.6 billion surplus. This is one of the biggest surpluses that Hawaii has ever had. And, that’s going to grow to $10 billion in just a few years. So, we don’t need the money,”
The bill was introduced and passed its first reading.