Bill Text: HI SB855 | 2011 | Regular Session | Introduced
Bill Title: Taxation; Personal Exemption; Conformance
Spectrum: Slight Partisan Bill (Democrat 3-1)
Status: (Introduced - Dead) 2011-01-24 - (S) Referred to WAM. [SB855 Detail]
Download: Hawaii-2011-SB855-Introduced.html
|
THE SENATE |
S.B. NO. |
855 |
|
TWENTY-SIXTH LEGISLATURE, 2011 |
|
|
|
STATE OF HAWAII |
|
|
|
|
|
|
|
|
||
|
|
||
A BILL FOR AN ACT
relating to conformance of state personal exemption to federal personal exemption.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that pursuant to article VII, section 3, of the State Constitution, the state tax review commission is charged with evaluating the state's tax structure and recommending revenue and tax policy.
According to the 2001-2003 tax review commission report, which focused on several areas including net income tax, Hawaii's net income tax rates are very high for both the rich and the poor. The commission recommended phasing in a higher standard deduction and personal exemption, widening the state tax brackets, and increasing overall federal conformity, including conformance to federal filing deadlines.
The commission's 2001-2003 report noted that, in 1984, the state personal exemption was raised to $1,000 to match the federal personal exemption. In 2001, the state personal exemption was $1,040 and the federal exemption was $2,900. In 2010, the state personal exemption was still $1,040 and the federal exemption was $3,650. The state personal exemption continues to be in nonconformance with the federal exemption.
The State unnecessarily taxes families with income levels that qualify for public assistance as a result of its failure to update the personal exemption amount to the federal amount. The purpose of this Act is to adopt the recommendation of the 2001-2003 tax review commission to raise the state personal exemption amount by conforming the state personal exemption amount to the federal personal exemption amount.
SECTION 2. Section 235-2.45, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) Section 641 (with respect to imposition of tax) of the Internal Revenue Code shall be operative for the purposes of this chapter subject to the following:
[(1) The deduction for exemptions shall be
allowed as provided in section 235-54(b);
(2)] (1) The deduction for contributions
and gifts in determining taxable income shall be limited to the amount allowed
in the case of an individual, unless the contributions and gifts are to be used
exclusively in the state; and
[(3)] (2) The tax imposed by Section 1(e)
of the Internal Revenue Code as applied by Section 641 of the Internal Revenue
Code is hereby imposed by this chapter at the rate and amount as determined
under section 235-51 on estates and trusts."
SECTION 3. Section 235-54, Hawaii Revised Statutes, is repealed.
["§235-54 Exemptions.
(a) In computing the taxable income of any individual, there shall be
deducted, in lieu of the personal exemptions allowed by the Internal Revenue
Code of 1986, as amended, and except as provided in subsection (c), personal
exemptions computed as follows: Ascertain the number of exemptions which the
individual can lawfully claim under the Internal Revenue Code, add an
additional exemption for the taxpayer or the taxpayer's spouse who is
sixty-five years of age or older within the taxable year, and multiply that
number by $1,144, for taxable years beginning after December 31, 1984. A
nonresident shall prorate the personal exemptions on account of income from
sources outside the State as provided in section 235-5. In the case of an
individual with respect to whom an exemption under this section is allowable to
another taxpayer for a taxable year beginning in the calendar year in which the
individual's taxable year begins, the personal exemption amount applicable to
such individual under this subsection for such individual's taxable year shall
be zero.
(b) In computing the taxable income of an
estate or trust there shall be allowed, in lieu of the deductions allowed under
subsection (a), the following:
(1) An estate shall be allowed a deduction
of $400.
(2) A trust which, under its governing
instrument, is required to distribute all of its income currently shall be
allowed a deduction of $200.
(3) All other trusts shall be allowed a
deduction of $80.
(c) The phaseout under section 151(d)(3) of
the Internal Revenue Code of 1986, as amended, shall apply to this section;
provided that the threshold income amounts under section 151(d)(3)(C) of the
Internal Revenue Code of 1986, as amended, shall be reduced by twenty-five per
cent for the purposes of this subsection; provided further that the threshold
income amounts under section 151(d)(3)(C) of the Internal Revenue Code of 1986,
as amended, used to determine the twenty-five per cent reduction under this
subsection shall be maintained at the amounts in place on July 1, 2008.
(d) A blind person, a deaf person, and any
person totally disabled, in lieu of the personal exemptions allowed by the
Internal Revenue Code, shall be allowed, and there shall be deducted in
computing the taxable income of a blind person, a deaf person, or a totally
disabled person, instead of the exemptions provided by subsection (a), the
amount of $7,000."]
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act shall take effect on January 1, 2012, and shall apply to taxable years beginning after December 31, 2011.
|
INTRODUCED BY: |
_____________________________ |
|
|
|
Report Title:
Taxation; Personal Exemption; Conformance
Description:
Conforms the State personal exemption amount to the federal personal exemption amount.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
