Thousands of low-income families to benefit from new state tax credit

Thousands of low-income families to benefit from new state tax credit
Updated: Jul. 10, 2017 at 5:03 PM HST
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HONOLULU (HawaiiNewsNow) - Marchell Tugadi is a single mom with a 17-year-old special needs son. She works full-time, but still struggles to make ends meet.

"There are times when my cash runs low and I can't buy me something to eat, I'll buy it for my son and I'll go without eating," she said.

The state is hoping a new tax measure will give people like Tugadi a boost.

Gov. David Ige signed into law Monday a measure that could help more than 107,000 Hawaii households by giving low-income earners a state tax credit that lowers their tax bill and keeps more money in their pockets.

Gavin Thornton of the Hawaii Appleseed Center for Law and Economic Justice said the state tax credit mirrors the federal earned income tax credit.

"The federal EITC is responsible for bringing more low-income children out of poverty than any other program in the nation," he said.

Those who qualify will get an additional 10 percent of their federal tax credit in their state tax refunds.

But Tom Yamachika, of the Tax Foundation of Hawaii, said the new law amounts to a tax hike that restores higher tax rates on higher income earners that lawmakers enacted in 2010 when government needed more money.

"We got rid of them at the end of 2015. Now, guess what? They're back again, and they're here to stay permanently. So guess what happens the next time government needs money?" he said.

State Rep. Aaron Johanson introduced the measure. He believes the impact won't be burdensome.

"For folks making $300,000 or more in state income, they would be most affected by this, and they would pay the rates they used to pay up until 2015 when those tax rates lapsed," he said.

Advocates have worked for a state earned income tax credit for Hawaii's working poor for over 20 years.

"To me that means so much, not just for me, but for single parents out there that will be helped from this," Tugadi said.

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