Reducing Hawaii's Income Tax On Working-Poor Families: Three Options
Publication Date: March 2004
Author(s): Bob Zahradnik
Special Collection: John D. and Catherine T. MacArthur Foundation
Keywords: State budgets; Tax code; Household income; Income diversity
Hawaii's income tax on poor working families is among the nation's very highest. Hawaii levies its income tax on a family of four with income as low as $11,600 — an amount that is less than 65 percent of the federal poverty line. A two-parent family of four with income at the poverty line in 2002 paid $378 in Hawaii income taxes, more than in all but four of the 41 states and the District of Columbia that levy income taxes.
This income tax burden has the effect of making poor working families poorer. This is particularly problematic at a time when state welfare policy strives to encourage low-income families to work themselves off welfare and out of poverty.