Hawaii’s new tax plan is good for homeowners, renters and businesses, but it’s a bad idea for renters and people of color
A tax plan introduced by Hawaii Gov.
Brian Schweitzer this week would tax residential real estate by a 10 percent rate for the first $1 million of a property’s value.
The plan would raise $9.5 billion annually through this measure, which could be used to build more affordable housing and create new public housing.
“I want Hawaii to be a leader in the international community,” Schweitzer said at a press conference Tuesday.
“It is not a perfect place.
But it’s where we can make the most progress.”
Hawaii is one of a handful of states that have been able to achieve a real estate tax in place for years.
In a similar way to California’s Proposition 14, the proposal would raise money by making it harder for low-income people to afford housing and by reducing property taxes for wealthy residents.
The legislation also would eliminate a loophole allowing wealthy homeowners to deduct their property taxes from their federal taxes, which would help to fund affordable housing.
While this plan is a step in the right direction, it will only work if homeowners are able to pay the tax in full.
“If we tax our houses to pay for affordable housing, it makes it harder to be self-sufficient,” said Kiki Smith, a senior policy analyst at the National Low Income Housing Coalition, which supports affordable housing development in the state.
“We can’t afford to live like this.”
This is a complicated issue.
The tax code is complex and doesn’t include a way to separate housing from the rest of the economy.
In Hawaii, property values are subject to a variety of rules and regulations, such as the state’s sales tax.
To make matters worse, the state doesn’t even have a real-estate sales tax at all.
This means that property taxes can easily be passed on to property owners.
The proposed tax could increase property taxes by as much as 10 percent for a home with a market value of $500,000 or more, according to a report from the Hawaii Association of Realtors.
This is why, when Hawaii enacted Prop.
14, it passed a bill with the goal of reducing the tax burden on the most affluent households.
The goal of the bill was to create a new type of income tax that would require landlords to pass on the tax to their tenants, which means they would have to pay a tax to the state on all property in their buildings.
“This new tax will help address the inequity in Hawaii’s tax system,” said Chris Stavola, executive director of the Hawaii Taxpayers Alliance, which represents landlords.
“The current system is unfair and creates an inequity between those who are able and those who can’t.”
Hawaii’s proposal also would allow homeowners to avoid paying property taxes if they rent from non-profit agencies or cooperatives, which are exempt from property taxes in the first place.
The bill also includes an exemption for rental properties that are owned by a nonprofit that operates for charitable or religious purposes.
However, the tax would apply only to rental properties of owners who have been actively involved in the nonprofit since 2014.
If a nonprofit owner passes away, the property would be considered to be the property of the nonprofit’s successor and the current owner would pay the property tax.
In contrast, homeowners would be responsible for paying the tax on the value of the rental property, which is why a bill introduced last year that would exempt homeowners from the tax by limiting the exemption was defeated by the legislature.
This tax is also being phased in over a period of years, meaning that many homeowners would have a tax bill that’s just coming due by the end of 2019.
The governor’s plan also includes new exemptions that could make it easier for landlords to file their taxes as well as new rules to prevent landlords from evicting tenants or refusing to rent to people with disabilities.
In addition, there are some loopholes in the tax that are intended to encourage developers to build affordable housing in certain areas, which will be especially valuable to those who need the housing for economic reasons.
For example, a property can be eligible for an exemption if it’s at least two stories and five stories high, the bill states.
Additionally, the new tax bill will allow landlords to deduct up to 25 percent of the purchase price of a rental property if they make up the difference from property sales taxes, and landlords could deduct up $50,000 of the sale price of any rental property that they sell, according the report.
These loopholes will only help those who benefit the most from this tax plan, however.
“Housing affordability is a top priority for Hawaii and this tax reform will provide Hawaii’s renters and low- and moderate-income families with relief in the form of a tax break that is both fair and effective,” said Julie Binder, executive vice president of the National Association of REALTORS.
“By making it easier to create affordable housing for renters,