Tech Community: Act 221 Research Stinks!

Hawaii's high-tech community is railing against a recently released draft study of Act 221, our high-tech business investment tax credit, saying that the analysis of the limited data available was plagued with inaccuracies, contradictions, and a lack of objectivity. The study was commissioned by the State's Tax Review Commission and produced by Marcia Sakai, dean of the University of Hawaii-Hilo's College of Business Administration, and Bruce Bird, a professor of accounting and finance at the University of West Georgia. The techies do agree with the study's authors that there is too little data available from the Dept. of Taxation, and do support a thorough examination of the effectiveness of Act 221. However, the manner in which the meager data available was interpreted did not befit a "responsible analysis."

More specifically, a group of local high-tech industry leaders said this in a commentary in the Honolulu Advertiser this Sunday (earthquake day):

The study, focused on the investment tax credits, uncovered some promising data on significant investment and job growth already being realized.

But this positive data was lost in interpretation.

The way the data were interpreted, the multiple contradictions, and how the study was conducted, does not meet the level of accuracy and objectivity required in a responsible analysis. The professors themselves acknowledged inaccuracies and limitations regarding their findings and their omission in failing to talk to the basic
participants of Act 221/215.

Industry members agree that a study on the tax credits should be done. Understanding its effectiveness is important to everyone. But such a study must be accurate, objective, adequately consider both quantitative and qualitative factors, clearly establish criteria for effectiveness and directly address issues related to law's intent.

They then go on to list some of the contradictions presented in the study, and highlight the benefits of Act 221 that the study failed to address. Due to the intense outcry from the tech community regarding the poor study, Tax Review Commission chair Isaac Choy has postponed the final release of the study till the end of this month.

Act 221 has been polarized, politicized, and controversial since its inception, which makes it all the more urgent to have an objective, fair study (backed by clear, current, accessible data) analyzing its benefits and flaws. Until such a study exists, we will continue to fight blindly over the merits of Act 221. We're all waiting with bated breath.

>> Tech credit's value lost in flawed analysis [Hnl Advertiser, 10/15/06]
>> Report on tech tax credits comes under fire [Hnl Star-Bulletin, 10/13/06]

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