Updated at 10:49 a.m., Wednesday, February 14, 2007
State urged to approve local earned income tax credit
Advertiser Staff
Hawai'i's legislators should consider passing a bill creating a local earned income tax credit because the state has one of the highest income taxes on low-income working families, according to a report from the Center on Budget and Policy Priorities, a Washington-based nonpartisan research group.The report said Hawai'i has the highest income taxes on families of three with incomes at the poverty line or at 125 percent of the poverty line. It also has among the lowest thresholds for income tax, it said.
The review found that an earned income tax credit (EITC) proposal being considered by legislators was superior to a package of tax cuts proposed by Gov. Linda Lingle because it would bring more tax relief to families.
"With an EITC, Hawai'i's income tax would no longer be one of the nation's most burdensome on low-income families," said Jason Levitis, a center policy analyst and author of the report, in a news release on the study.
"That would be an important step forward, especially given Hawai'i's high cost of living."
The group said Lingle's proposal would cost about $60 million a year but that Hawai'i's income tax burden on low-income families would remain one of the worst in the nation. It said a state EITC set at 20 percent of the federal earned income tax credit would cost about $26 million a year.
