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Tourism tax as a key revenue source for a state can really create valiantly of revenue for a state. Makes sense to have a rainy day fund set aside for times like the present...
"Hawaii is facing a potential budget shortfall of more than $2 billion. In the span of two months, the state's economy went from having the lowest unemployment rate in the country to one of the highest.
The tourism industry, fueled by 10 million annual visitors, is the largest employer in Hawaii and brings in a substantial portion of tax revenue. A precipitous drop in arriving tourists has put fiscal pressure on the state government, from both falling revenue and a rapid increase in unemployment claims.
In April [2020], Democratic Gov. David Ige warned that the state's precarious finances could necessitate an across-the-board 20% pay cut for public workers. Ige walked that back when leaders in the Legislature expressed a preference for borrowing funds needed to fill the budget hole.
Lawmakers were able to free up $1.3 billion by reallocating funds previously budgeted but unspent as of yet. They also authorized the governor to borrow up to $2.1 billion from the Federal Reserve's Municipal Liquidity Facility to cover the remaining gap.
As coronavirus cases surge on the U.S. mainland, which makes up nearly three-quarters of Hawaii's tourism market, prospects for the state's economy are uncertain and the governor is once again warning of potential furloughs to the state workforce."
Yes Hawaii prices are high. But CA is equally high; CA govt charges 1.25% and still crys poor.
Average home price in Hawaii = $649,000
Average home price in CA = $635,000
So they're close, but CA is less.
Average household income in the US = about $62,000
Average household income in Hawaii = $80,212
Average household income in CA = $75,235
Population of Hawaii = 1.4 Million
Population of CA = 40 Million
Why CA taxes are higher than Hawaii - I'd guess it has something to do with the enormous population of the state, and the large land mass. It also has a much larger immigrant population than any other state, as well as diverse racially. It'd take a lot of money to keep that state going. Roads, highways, parks & recreation, services, education, health care, on a massive scale. It's the 5th largest economy in the world. Education & health care are its two largest expenses, I've read. The wildfires must cost a pretty penny.
Average home price in Hawaii = $649,000
Average home price in CA = $635,000
So they're close, but CA is less.
Average household income in the US = about $62,000
Average household income in Hawaii = $80,212
Average household income in CA = $75,235
Population of Hawaii = 1.4 Million
Population of CA = 40 Million
Why CA taxes are higher than Hawaii - I'd guess it has something to do with the enormous population of the state, and the large land mass. It also has a much larger immigrant population than any other state, as well as diverse racially. It'd take a lot of money to keep that state going. Roads, highways, parks & recreation, services, education, health care, on a massive scale. It's the 5th largest economy in the world. Education & health care are its two largest expenses, I've read. The wildfires must cost a pretty penny.
While Hawaii is more of a third world country, especially once you get outside of Honolulu, the only actual city (with a city government) in the state. The other islands have only county government.
Infrastructure ranges from pretty good in wealthy areas to absolutely rotten in poor areas. One subdivision I lived in had beautifully paved roads and a streetlight every other house, all paid for by the county. Lots of similar subdivisions couldn't get the same county to even grade their dirt roads.
Here's a shot of revenue sources for Hawaii in 2017:
44% of revenue is from their general excise tax paid by businesses - .5% wholesale and 4-4.5% retail. It's not a sales tax a businesses do not have to collect it from consumers but they have to pay it based on sales. All items including food and clothing are subject to the GET. I presume all businesses simply add it to the invoice as a line item.
Average home price in Hawaii = $649,000
Average home price in CA = $635,000
So they're close, but CA is less.
Average household income in the US = about $62,000
Average household income in Hawaii = $80,212
Average household income in CA = $75,235
Population of Hawaii = 1.4 Million
Population of CA = 40 Million
Why CA taxes are higher than Hawaii - I'd guess it has something to do with the enormous population of the state, and the large land mass. It also has a much larger immigrant population than any other state, as well as diverse racially. It'd take a lot of money to keep that state going. Roads, highways, parks & recreation, services, education, health care, on a massive scale. It's the 5th largest economy in the world. Education & health care are its two largest expenses, I've read. The wildfires must cost a pretty penny.
Make no mistake, California would be the 2nd largest economy in the World, if it weren't for the anti-business stance of it's Governing bodies. Bet the farm on this.
Hotel taxes and other tourist dollars, excise tax on ALL exchange of money (food purchases, they tax services like tax preparation, or hiring an architect)
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Here's a shot of revenue sources for Hawaii in 2017:
44% of revenue is from their general excise tax paid by businesses - .5% wholesale and 4-4.5% retail. It's not a sales tax a businesses do not have to collect it from consumers but they have to pay it based on sales. All items including food and clothing are subject to the GET. I presume all businesses simply add it to the invoice as a line item.
This is the main difference. A side note too I think the state funds the public schools not the local level if I remember correctly which can be a pretty big shift from some states where the local property tax funds the schools
Hotel taxes and other tourist dollars, excise tax on ALL exchange of money (food purchases, they tax services like tax preparation, or hiring an architect)
I admire the chutzpah of Hawaii in calling their tax program "GET" (General Excise Tax)
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Always consider your personal "total tax burden", not just any one specific tax policy
