SB925 SD1

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

wealth asset tax

§ -1 Definitions. As used in this chapter:

"Department" means the department of taxation.

"Director" means the director of taxation.

"Taxpayer" means a person subject to a tax imposed by this chapter, including individuals, estates, and trusts.

§ -2 Imposition of tax. There is hereby imposed and shall be levied, collected, and paid, a tax on the activity of sustaining excessive accumulations of wealth by every qualified taxpayer.

§ -3 Basis and rate; wealth asset tax. (a) The tax imposed by section -2 shall be one per cent of the state net worth in excess of $20,000,000 for each individual taxpayer who holds more than $20,000,000 in assets in the State; provided that the individual taxpayer's net worth shall be based on the individual's assets, not joint assets, and a married individual shall file a separate return; provided further that if the taxpayer pays a wealth asset tax on the same asset in a different state, the amount paid to the other state shall be subtracted from the state tax liability.

(b) A taxpayer's state net worth shall be determined pursuant to rules adopted by the department; provided that a taxpayer's state net worth shall include but not be limited to the aggregate value of assets in the following categories:

(1) Real Property;

(2) Stock in any publicly and privately traded C‑corporation;

(3) Stock in any S‑corporation;

(4) Interests in any partnership;

(5) Interests in any private equity or hedge fund;

(6) Interests in any other noncorporate business;

(7) Bonds and interest-bearing savings accounts;

(8) Cash and deposits;

(9) Farm assets;

(10) Interest in mutual funds or index funds;

(11) Put and call options on securities;

(12) Futures contracts;

(13) Art and collectables;

(14) Financial assets held offshore;

(15) Pension funds;

(16) Debts owed to the taxpayer; and

(17) Other assets.

§ -4 Reporting and payment. (a) Assets used to determine state net worth pursuant to section -3(b) shall be reported in a form and manner specified by the director.

(b) The tax imposed by this chapter shall be reported with, and payable at the same time as, taxes imposed pursuant to chapter 235.

§ -5 Assets belonging to dependents. For the purpose of determining state net worth and tax liability under this chapter, any assets belonging to a person who can be claimed as a dependent that are in excess of $50,000 shall be deemed to be assets of the taxpayer who can claim the person as a dependent.

§ -6 Valuation of assets. Valuation or appraisal of assets reported pursuant to section -3(b) shall be done in a manner specified by the director in accordance with rules adopted by the department.

§ -7 Forms. The director shall prescribe forms to be used in filing return and reports required by this chapter.

§ -8 Rules. The department shall adopt rules in accordance with chapter 91 to implement this chapter."

SECTION 2. The department of taxation shall submit proposed legislation suggesting the types of debts to be considered in determining net worth, methods to be used for valuation of assets, time periods for which valuation of assets shall occur, methods for allocation and apportionment,

withholding requirements, reporting requirements, limitation periods, and audit and assessment provisions to the legislature no later than forty days prior to the convening of the regular session of 2024.

SECTION 3. Every provision in this Act and every application of each provision in this Act is severable from each other. If any application of any provision in this Act to any person or group of persons or circumstances is determined by any court to be invalid, the remainder of this Act and the application of the Act's provisions to all other persons and circumstances shall not be affected. All constitutionally valid applications of this Act shall be severed from any applications that a court determines to be invalid or unenforceable, leaving the valid applications in force, because it is the legislature's intent that all valid applications shall remain in force.

SECTION 4. This Act shall take effect on March 22, 2075: provided that this Act shall apply to taxable years beginning after December 31, 2025.

THE SENATE	S.B. NO.	925
THIRTY-SECOND LEGISLATURE, 2023		S.D. 1
STATE OF HAWAII