Overriding Vetoes, Legislature OKs Tax Hikes

Overriding vetoes from Hawaii Gov. Linda Lingle, lawmakers Friday approved a series of tax increases to balance the state’s budget, in the process enacting the nation’s highest state income-tax rate.

The income tax hike will add 9%, 10%, and 11% brackets above the previous top 8.25% bracket. Those new brackets affect single taxpayers with income over $150,000, $175,000, and $200,000, respectively, and at double those levels for couples filing jointly.

Lawmakers also approved increases to taxes on tobacco products other than cigarettes, to hotel room taxes, and to the conveyance tax on property sales over $2 million.

Lingle, a Republican, vetoed all four bills last Thursday at a public event.

The Legislature, dominated by Democrats who hold 68 of the 76 seats in the two houses, overrode them easily.

“Hawaii currently has the eighth-highest top personal income-tax rate in the United States,” Lingle said in her veto message for the income tax bill. “By increasing the top marginal tax rate from 8.25% to 11%, this bill will make Hawaii the state with the highest personal income tax rate in the nation.”

The governor also said the hotel room tax would hurt the state’s most important industry.

“Hawaii’s economy cannot recover from the current economic recession without a recovery in tourism,” she said, noting that the state’s hotel occupancy rates have declined for 13 months in a row despite falling room rates.

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