Hawaii Film Blog: Tax Incentives Suck...Who Said That?

Tuesday, September 27, 2005

Tax Incentives Suck...Who Said That?

In the interest of being "fair and balanced" (sorry for quoting Fox News), let me introduce you to Lowell Kalapa, president of the Tax Foundation of Hawaii, "a private, nonprofit educational organization dedicated to informing the public, more specifically the taxpayer, which means all of us, about the finances of our state and local governments in Hawaii." Kalapa and another unnamed individual were the sole public opponents of the tax incentive bills last year that sought to increase Hawaii's refundable production tax credit from 4% to 15-20%.

Kalapa writes a column in the Hawaii Reporter, touting his sometimes eyebrow-raising views. He must at the very least be given credit for being brave enough to regularly rant against perceived wrongs, abuses, and incompetencies in Hawaii's state and local governments. In Kalapa's latest column, "Ultimately We All Pay for Lawmakers' Ignorance," he rails against the idiocy of the bottle bill, the gas cap, and special interest tax incentives, including Act 221 and its opacity.

I'd like to comment on one of Kalapa's points as I think it represents a widely held misperception of Act 221. Like many others, Kalapa seems to regard job creation as the sole measure of success for Act 221. It is certainly one of the primary goals of the tax incentive, but we must remember that it is the quality of these kinds of jobs (highly skilled, highly paid, forward-looking) more than the quantity that matter. I mean, take large-scale pineapple production in Hawaii for example. It started declining in the mid-60s, and ended with Dole shutting down its plants over a decade ago in favor of cheaper foreign locales. Manufacturing and mass production in general has moved out of the U.S. and/or has become much more automated and computerized. So if people are looking for Act 221 to spark an industrial revolution that creates heaps upon heaps of jobs, they're either looking in the wrong century or the wrong hemisphere.

In developed nations of the 21st century, it is no longer the quantity of jobs that indicates economic and cultural progress, but the quality of them. Besides, with Hawaii's unemployment at an all-time low, record visitor numbers, and increased immigration from the mainland, do we really want to create an excess of jobs that we'll have to import workers to fill (as the local construction industry is currently doing)? Have you sat in 5pm traffic on the westbound H1 lately?

As for Kalapa's other gripes, he should take 'em up with the State Legislature (as I'm sure he will). In fact, if any of you reading this has gripes, suggestions, or proposed solutions to any issue or problem that can be changed through legislation, you can all take a hint from Kalapa and contact your legislators. The next legislative session is quickly encroaching upon us (January 2006), so start airing your opinions now. John Gardner, Secretary of Health, Education & Welfare under Lyndon Johnson and founder of Common Cause, said "The citizen can bring our political and governmental institutions back to life, make them responsive and accountable, and keep them honest. No one else can." So go forth and do it.