Bill Text: HI SCR158 | 2024 | Regular Session | Amended
Bill Title: Requesting The Department Of Taxation To Conduct A Study On Disallowing The Dividends Paid Deduction For Real Estate Investment Trusts.
Spectrum: Moderate Partisan Bill (Democrat 5-1)
Status: (Engrossed - Dead) 2024-04-05 - Referred to ECD, FIN, referral sheet 27 [SCR158 Detail]
Download: Hawaii-2024-SCR158-Amended.html
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THE SENATE |
S.C.R. NO. |
158 |
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THIRTY-SECOND LEGISLATURE, 2024 |
S.D. 1 |
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STATE OF HAWAII |
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SENATE CONCURRENT
RESOLUTION
REQUESTING THE DEPARTMENT OF TAXATION TO CONDUCT A STUDY ON DISALLOWING THE DIVIDENDS PAID DEDUCTION FOR REAL ESTATE INVESTMENT TRUSTS.
WHEREAS, real estate investment trusts were established by the federal government to give investors, especially small investors, access to income-producing real estate; and
WHEREAS, the Internal Revenue Code allows a dividends paid deduction to the real estate investment trust, thereby allowing the real estate investment trust to not pay tax on income distributed to its shareholders, who would then pay tax on that income; and
WHEREAS, existing state law conforms to these provisions but creates an anomaly because a real estate investment trust that does business in Hawaii and pays dividends to shareholders outside the State results in no Hawaii income tax collected, because shareholders pay tax on dividends to the state in which they reside, not where the income was generated; and
WHEREAS, while some real estate investment trusts that do business in Hawaii have shareholders who reside in the State, a substantial majority do not; and
WHEREAS, real estate investment trusts own more real estate in Hawaii per capita than in any other state; now, therefore,
BE IT RESOLVED by the Senate of the Thirty-second Legislature of the State of Hawaii, Regular Session of 2024, the House of Representatives concurring, that the Department of Taxation is requested to conduct a study on the advantages and disadvantages of disallowing the dividends paid deduction for real estate investment trusts; and
BE IT FURTHER RESOLVED that the study is requested to:
(1) Be conducted by tax revenue experts and economists;
(2) Analyze real estate investment trust investments in Hawaii across ten asset classes (tower, industrial, retail, self-storage, lodging and resort, office, health care, specialty, residential, and mixed-use sectors), including affordable residential, student housing, telecommunications infrastructure, and health care facilities;
(3) Estimate the change in revenue collected by the State after disallowing the dividends paid deduction, including the impact to the amount of general excise taxes collected from the operation of hotels owned by real estate investment trusts, other corporate income tax deductions that real estate investment trusts could take, and any differences in the levels of maintenance and capital improvements to properties between real estate investment trusts and non-real estate investment trust owners;
(4) Consider other states' treatment of the dividends paid deduction for real estate investment trusts, and any impacts or effects resulting therefrom;
(5) Consider possible exceptions to disallowing the dividends paid deduction for real estate investment trusts, and any impacts or effects resulting therefrom;
(6) Compare the loss of general excise taxes collected from hotels owned by real estate investment trusts to any potential increase in corporate income tax revenues collected by the State;
(7) Show any potential tax revenue gains netted against the losses incurred during the coronavirus disease 2019 (COVID-19) pandemic;
(8) Examine overall capital expenditures made in Hawaii by real estate investment trusts during the COVID-19 pandemic as compared to the capital expenditures made by non-real estate investment trust owners, and the impact on the general excise taxes collected and construction jobs generated for the State;
(9) Identify expected real estate investment trust projects and their potential impact on general excise taxes and corporate income taxes to be collected by the State, as well as any loss of revenues, construction, and other jobs, if real estate investment trusts withdraw from those projects; and
(10) Include a comparison of the investments made in Hawaii of long-term real estate investment trust owners versus non-real estate investment trust owners that acquire and sell properties as a business model; and
BE IT FURTHER RESOLVED that a certified copy of this Concurrent Resolution be transmitted to the Director of Taxation.
Taxation; Real Estate Investment Trusts; Dividends Paid Deduction;
