REPORT TITLE: 
Corporate Income Tax


DESCRIPTION:
Reduces state corporate income tax rates by fifty per cent.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
HOUSE OF REPRESENTATIVES                H.B. NO.977        
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                     A BILL FOR AN ACT

RELATING TO TAXATION.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Section 235-71, Hawaii Revised Statutes, is
 
 2 amended as follows:
 
 3      1.  By amending subsections (a) and (b) to read:
 
 4      "(a)  A tax at the rates [herein provided] as set forth in
 
 5 this section shall be assessed, levied, collected, and paid for
 
 6 each taxable year on the taxable income of every corporation,
 
 7 including a corporation carrying on business in partnership,
 
 8 except that [in] :
 
 9      (1)  In the case of a regulated investment company, the tax
 
10           [is as provided by] shall be set forth in subsection
 
11           (b); and [further that in]
 
12      (2)  In the case of a real estate investment trust, as
 
13           defined in section 856 of the Internal Revenue Code [of
 
14           1954], the tax [is as provided] shall be as set forth
 
15           in subsection (d).
 
16      "Corporation" includes any professional corporation
 
17 incorporated pursuant to chapter 415A.
 
18      The tax on all taxable income shall be at the rate of [4.4]
 
19 2.2 per cent if the taxable income is not over $25,000, [5.4] 2.7
 

 
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                                     H.B. NO.977        
                                                        
                                                        

 
 1 per cent if over $25,000 but not over $100,000, and on all over
 
 2 $100,000, [6.4] 3.2 per cent.
 
 3      (b)  In the case of a regulated investment company, there is
 
 4 imposed on the taxable income, computed as provided in sections
 
 5 852 and 855 of the Internal Revenue Code but with the changes and
 
 6 adjustments made by this chapter (without prejudice to the
 
 7 generality of the foregoing, the deduction for dividends paid is
 
 8 limited to such amount of dividends as is attributable to income
 
 9 taxable under this chapter), a tax consisting in the sum of the
 
10 following:  [4.4] 2.2 per cent if the taxable income is not over
 
11 $25,000, [5.4] 2.7 per cent if over $25,000 but not over
 
12 $100,000, and on all over $100,000, [6.4] 3.2 per cent."
 
13      2.  By amending subsection (d) to read:
 
14      "(d)  In the case of a real estate investment trust, there
 
15 is imposed on the taxable income, computed as provided in
 
16 sections 857 and 858 of the Internal Revenue Code but with the
 
17 changes and adjustments made by this chapter (without prejudice
 
18 to the generality of the foregoing, the deduction for dividends
 
19 paid is limited to such amount of dividends as is attributable to
 
20 income taxable under this chapter), a tax consisting in the sum
 
21 of the following: [4.4] 2.2 per cent if the taxable income is not
 
22 over $25,000, [5.4] 2.7 per cent if over $25,000 but not over
 
23 $100,000, and on all over $100,000, [6.4] 3.2 per cent.  In
 

 
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                                     H.B. NO.977        
                                                        
                                                        

 
 1 addition to any other penalty provided by law any real estate
 
 2 investment trust whose tax liability for any taxable year is
 
 3 deemed to be increased pursuant to section 859(b)(2)(A) or
 
 4 860(c)(1)(A) after December 31, 1978, (relating to interest and
 
 5 additions to tax determined with respect to the amount of the
 
 6 deduction for deficiency dividends allowed) of the Internal
 
 7 Revenue Code shall pay a penalty in an amount equal to the amount
 
 8 of interest for which [such] the trust is liable that is
 
 9 attributable solely to [such] the increase.
 
10      The penalty payable under this subsection with respect to
 
11 any determination shall not exceed one-half of the amount of the
 
12 deduction allowed by section 859(a), or 860(a) after December 31,
 
13 1978, of the Internal Revenue Code for [such] that taxable year."
 
14      SECTION 2.  Section 235-71.5, Hawaii Revised Statutes, is
 
15 amended to read as follows:
 
16      "§235-71.5  Alternative tax for corporations.  Section 1201
 
17 (with respect to alternative tax for corporations) of the
 
18 Internal Revenue Code of 1986, as amended as of December 31,
 
19 1996, shall be operative for the purposes of this chapter and
 
20 shall be applied as set forth in this section.  If for any
 
21 taxable year a corporation, regulated investment company, or real
 
22 estate investment trust has a net capital gain, then, in lieu of
 
23 the tax imposed by section 235-71, there is hereby imposed a tax
 

 
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                                     H.B. NO.977        
                                                        
                                                        

 
 1 (if [such] the tax is less than the tax imposed under section
 
 2 235-71) [which] that shall consist of the sum of:
 
 3      (1)  A tax computed on the taxable income reduced by the
 
 4           amount of the net capital gain, at the rates and in the
 
 5           manner as if this section had not been enacted, plus
 
 6      (2)  The sum of:
 
 7           (A)  [3.08] 1.54 per cent of the lesser of [:] either:
 
 8                (i)  The net capital gain determined by including
 
 9                     only the gain or loss [which] that is
 
10                     properly taken into account for the portion
 
11                     of the taxable year before April 1, 1987
 
12                     (i.e., the amount in paragraph (1))[,]; or
 
13               (ii)  The net capital gain for the taxable year,
 
14                     plus,
 
15           (B)  [4] 2.0 per cent of the excess (if any) of[:
 
16                (i)  The] net capital gain for the taxable year[,]
 
17                     over
 
18              [(ii)  The] the amount of the net capital gain taken
 
19                     into account under subparagraph (A)."
 
20      SECTION 3.  Statutory material to be repealed is bracketed.
 
21 New statutory material is underscored.
 
22      SECTION 4.  This Act shall take effect on July 1, 1999.
 
23 
 
24                           INTRODUCED BY:  _______________________