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The Honolulu Advertiser

Posted on: Friday, June 8, 2001

Campbell Estate tax boon makes sense

Hawai'i Sens. Dan Inouye and Dan Akaka were right to vote against the massive $1.35 trillion tax package passed by Congress this week. U.S. Rep. Neil Abercrombie should have joined them.

But credit Abercrombie, Inouye and Akaka, who used connections and seniority to tag on a rare rider to the tax bill that will have direct and lasting impact on Hawai'i.

They managed to squeeze in an amendment that will pay huge benefits to the landholding Campbell Estate. The benefit is not in taxes saved; the estate will still have to pay everything it owes to Uncle Sam.

But the payments (plus interest) will be spread out over a number of years.

The practical impact of this is that when the Campbell Estate Trust expires in 2007, it will not have to be broken up to pay the enormous estate taxes that will become due.

Beneficiaries of the estate, who want to continue their business in a different legal form, feared they would have to break up and sell estate assets to meet their obligations to Uncle Sam.

This is not in the best interests of Hawai'i, where the Campbell Estate has been vigorously pursuing the development of the so-called "second city" of Kapolei on its lands in the 'Ewa plain. What that has meant is unified, coherent and locally based management of a very long-term development effort.

If the assets were broken up and sold to pay estate taxes, control might have left Hawai'i and the virtues of unified ownership of these lands would be lost.

The situation faced by the Campbell Estate is a relatively unusual one. It is an estate, operating as a business, that wishes to continue its operations when the original trust expires. This amendment will allow that to happen, while insuring that all taxes owed will still be paid.