STAND. COM. REP. NO. 3447
Honolulu, Hawaii
RE: H.B. No. 2510
H.D. 2
S.D. 1
Honorable Ronald D. Kouchi
President of the Senate
Thirty-First State Legislature
Regular Session of 2022
State of Hawaii
Sir:
Your Committee on Labor, Culture and the Arts, to which was referred H.B. No. 2510, H.D. 2, entitled:
"A BILL FOR AN ACT RELATING TO INCOME,"
begs leave to report as follows:
The purpose and intent of this measure is to help working families by:
(1) Making the earned income tax credit refundable and permanent for taxable years beginning after December 31, 2022, and allowing the earned income tax credits that were earned in previous tax years to be carried forward and used to offset tax liability in subsequent years until exhausted or up to the end of the 2024 taxable year;
(2) Increasing the State's minimum wage to $13.00 per hour beginning on January 1, 2023, and thereafter incrementally increasing it by $1.00 every year, up to $18.00 per hour on January 1, 2028; and
(3) Increasing the State's tip credit to $1.50 per hour beginning on January 1, 2023, and thereafter incrementally increasing it by 25 cents every year, up to $2.75 per hour on January 1, 2028.
Your Committee
received testimony in support of this measure from the Department of Labor and Industrial
Relations; Department of Human Services; two members
of the Hawaii County Council; Pride at Work - Hawaii;
League of Women Votersฎ of Hawaii; Save Medicaid Hawaii; Hawaii
Government Employees Association, AFSCME Local 152, AFL‑CIO; The Church
of the Crossroads; Community Alliance Partners; Hawaii State Association of
Counties; Pono Hawaii Initiative; Stonewall Caucus of the
Democratic Party of Hawaii; Early Childhood Action Strategy; Zero
Waste Kauai; Hawaii Petroleum Marketers Association; Americans for Democratic
Action Hawaii; Hawaii
Children's Action Network Speaks!; Catholic Charities
Hawaii; and fifty-one individuals. Your Committee received
testimony in opposition to this measure from IL Gelato Hawaii, Highway Inn, Gyotaku
Japanese Restaurants, Magics Beach Grill, Raise Up Hawaii Kauai, Hawaii Clubhouse
Advocacy Coalition, Hawaii Alliance for Progressive Action, National
Federation of Independent Business, Democratic Party of Hawaii
Education Caucus, Imua Alliance, Society of Human Resources Management,
Hawaii Food Manufacturers Association, Hawaii County Democratic Party, Democratic
Party of Hawaii - Labor Caucus; and nineteen individuals. Your Committee received comments on this measure
from the Department of Budget and Finance; Department
of Taxation; Tax Foundation of Hawaii; Hawaii Restaurant Association; Microenvironmental;
Retail Merchants of Hawaii; Free Access Coalition; Hawaii Appleseed Center for
Law & Economic Justice; UNITE HERE Local 5; Grassroot Institute of Hawaii; Chamber
of Commerce Hawaii; United Public Workers, AFSCME Local
646, AFL-CIO; Hawaii Public Health Institute; Living
Wage Hawaii; Maui Chamber of Commerce; Hawaii Farm
Bureau; Hawaii Food Industry Association; Hawaii Workers Center; and twenty-two
individuals.
Your Committee finds
that, according to a report titled "Self-Sufficiency Income Standard
Estimates for Hawaii 2020" issued by the Department of Business, Economic
Development, and Tourism in December 2021, approximately 18.2 percent of
two-adult couples with no children, and 34.7 percent of two-adult couples with
two children had incomes below the self-sufficiency standard in 2020. For single-adult with no children, single-adult
with one child, and single-adult with two children, 43.1 percent, 50.0 percent,
and 80.0 percent had incomes below the self-sufficiency level, respectively. The report also provided that a single adult with
no children in City and County of Honolulu, Hawaii County, Maui County, and Kauai
County, needed to earn an hourly wage of $18.35, $14.78, $17.84, and $19.33, respectively,
in 2020 to be able to meet the individuals' basic needs and to be economically
self-sufficient. Your Committee
also finds that the annual inflation rate in the United States accelerated to seven
percent in the last month of 2021, the highest since June of 1982, which will
further increase the cost of living in Hawaii.
Your Committee believes that this measure will help raise the quality of life for Hawaii residents,
reduce poverty, increase economic activity in the State, and appropriately
address inflation and the resulting increase of the cost of living in the
State.
Your Committee notes that
H.B. No. 1507, H.D. 1 (Regular Session of 2022), titled "A BILL FOR AN ACT
RELATING TO TAX FAIRNESS," that passed the House of Representatives and was
referred to your Committee on Ways and Means, includes provisions that makes
Hawaii's earned income tax credit refundable and permanent. Your Committee believes that H.B. No. 1507, H.D. 1 (Regular
Session of 2022), which pertains to income tax is a more appropriate vehicle
for this matter.
Your
Committee also notes multiple
testimonies stating that increasing the State's minimum wage, which has not
been changed since January 1, 2018, to $18.00 per hour over a span of six years
is insufficient to address the hardship which befalls the working families in
Hawaii. Your Committee notes that S.B.
No. 2018 (Regular Session of 2022), which passed the Senate in January 2022, proposes
to increase the State's minimum wage on a more accelerated schedule, specifically,
to $12.00 per hour beginning October 1, 2022; $15.00 per hour beginning January
1, 2024; and $18.00 per hour beginning January 1, 2026. Your Committee believes that this schedule is preferable, as it more appropriately
addresses the hardship that the working families in Hawaii are currently facing.
Your Committee finds
that the tip credit currently allows an employer to pay an hourly wage up to 75
cents less than the current $10.10 minimum wage, when the combined amount that an
employee receives from the employer together with tips exceeds $17.10 an hour. Your Committee received numerous testimonies
for the total repeal of the tip credit because it penalizes employees who
receive tips or gratuities for their services.
In effect, the tip credit serves as a subsidy from customers to the
employers of tipped workers, and the employers' obligation to pay the minimum
wage is paid in part by customers via their tips. Your Committee received no testimony
justifying the treatment of employers of tipped workers as a class of employers
different from all other employers obligated to pay the minimum wage.
Accordingly, your Committee has amended this measure by:
(1) Deleting the purpose section;
(2) Deleting section 2 relating to the earned income tax credit;
(3) Replacing the schedule of the minimum wage increase with the schedule provided in S.B. No. 2018 (Regular Session of 2022);
(4) Reducing the tip credit to 35 cents per hour beginning October 1, 2022, and zero cents per hour beginning January 1, 2026; and
(5) Making
technical, nonsubstantive amendments for the purposes of clarity and
consistency.
As affirmed by the record of votes of the members of your Committee on Labor, Culture and the Arts that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2510, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2510, H.D. 2, S.D. 1, and be referred to your Committee on Ways and Means.
Respectfully submitted on behalf of the members of the Committee on Labor, Culture and the Arts,
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________________________________ BRIAN T. TANIGUCHI, Chair |
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