Hawaii State Income Tax Rates

[winkosmosis]

Originally Posted by Tenzo

OK

In Illinois we pay 6% income tax, 10.75% sales tax and $10,000 a year property tax on a two bedroom two bath.

Explain to me how much worse the tax in in Hawaii?


When I lived in Philly I paid 6% income tax to the state, 4.5% for living in Philly (city tax) and 1.5% for working in Wilmington. Plus $8,000 in property tax. (I forget what the sales tax was, 7%?)

Explain how much worse the tax is in Hawaii?

Look at the image I posted. Local and state taxes come out to 12% for most people. 6% if you're rich.

[FallenIntoGreatness]

So if someone kept property in a mainland state but actually lived in Hawaii, they get to claim residency where they own property and file income tax there? How does that work if they work in Hawaii? Or are we talking about people that are no longer working and draw, meaning there is no proof they were actually in Hawaii most of the year?

I'm recalling a similar situation we have here. People buy up land where it is cheap and build what I call a mansion but those areas tend to have bad schools, so they buy some POS "house" in the good school district and their kids attend there. Also we have kids that claim to be homeless so they can attend out of district for various reasons.

[winkosmosis]

I went to H&R block to do my taxes today. I didn't do it myself because it was so complex and I didn't want to make mistakes. Here is what I learned-- H&R Block charges a LOT for part year resident and capital gains tax preparation. Check in advance what it will cost you.

My bill was about $330, and $270 with my $50 coupon.

BTW, if you moved last year, don't forget moving costs. I get a $485 refund from the state for moving costs and other things.

[FallenIntoGreatness]

I wouldn't trust H&R block to do anything for me. My friend got hers done there and due to them checking them wrong box on her return, it cost her $5k plus fees AND H&R block did not honor their "guarantee" at all. She tried to file a claim and they put her off and put her off so now she's on a payment plan with the IRS because they made a careless mistake.

The mistake by the way was this: she has a step-child and they marked an area that indicated it was her biological child, the child's biological mom had claimed him too so IRS came down on her. But the kid lives with Dad and Step-Mom all year so technically they were correct. If H&R had stood by their promise, it could have been straightened out but that didn't happen.

[Tenzo]

Originally Posted by winkosmosis

Look at the image I posted. Local and state taxes come out to 12% for most people. 6% if you're rich.

Well, then obviously I should be rich so I can pay less taxes.
(Obama taught me that logic)

[MarketMaker]

Originally Posted by Tenzo

Well, then obviously I should be rich so I can pay less taxes.
(Obama taught me that logic)

1. As income increases, people tend to invest the excess. As such, the proportion of their income that gets spent on sales/excise tax items & real estate drops. Thus, there's no surprise that those in the top 10% of income pay a lower percentage of their income in some form of tax.


2. Income taxes are a significant hurdle to becoming 'rich'. While there is much debate about tax policy, there is no question that high income tax rates make it harder for those born into the lower & middle classes to become 'rich'. Therefore, high income tax rates inhibit class mobility -- something many 'rich' people actually want. (Those from 'old money' don't really want 'new money' types vacationing in 'old money' hangouts like Martha's Vineyard.)


3. Many of us have heard phrases, like "The top X% of incomes pay Y% of the taxes." Getting accurate numbers, however, is always difficult. Thankfully, the Congressional Budget Office has data on this that everyone with a computer can access. In 1996, the top 1% paid 31.4% of the income tax liability. This steadily increased to 39.1% in 2006. Thus, under the lower Bush marginal rates, high income people did so incredibly well that they picked up a greater share of the overall tax burden.

That's both good & bad. Some 99% of the population likes having the top 1% pick up a higher percentage of the burden, but it comes at a price. As both California & the nation have discovered, the incomes of the top 1% are highly volatile and having a significant portion of the tax revenue being paid by these people means tax revenue is also highly volatile (to the downside).

So, it's hard to escape the conclusion that most stable, broad-based types of taxes are those that hit the lower & middle classes relatively hard, such as sales/excise taxes. I know, it sucks. So, no matter what lies the politicians tell you, if the Feds don't massively cut spending, you now know who is going to foot a huge chunk of the bill...


In case people haven't guessed it yet, I strongly dislike income taxes and not just on April 15th!). When you tax an activity, you get less of it. You want people to use less oil, then tax the heck out of gasoline. Likewise, high income taxes lead to less work & less income. I think that's a truly dumb approach to governing. Also, when tax rates are high, you create an incentive for people to evade paying the tax. CNBC's recent program on the topic gave an estimate of $300 billion in unpaid tax due to various forms of tax evasion (I think that translates to about $2,000 per tax payer). In my opinion, we need lower rates for everyone, fewer deductions, and MASSIVELY less government spending. Just my $0.02 on April 15th.