Hawai’i Tax System Ranks as One of the WorstSeptember 23, 2015, 9:32 AM HST (Updated September 23, 2015, 9:34 AM)
Financial website WalletHub recently analyzed 2015’s Most & Least Fair State Tax Systems. The findings left Hawai’i near the bottom.
In the study, WalletHub sought out what Americans think is a fair and local tax system and used information from those findings to rank the 50 states. The findings were compiled using an original online survey of 1,050 Americans, a sample that was designed to be national representative of age and sex with variation across income levels and racial and ethnic categories, as well as political beliefs. The data was dissected and compared against various data structures to determine the American view.
Ranking 48th overall in the study, Hawai’i also ranked as one of the highest dependent states on sales and excise tax. Hawai’i ranked relatively low in dependency on property tax (fifth), and dependency on income taxes, personal and corporate (12th), while ranking around the median for “other taxes” (24th).
The study also found that Hawai’i was placed in the upper half of two top 10 lists of over-taxation. Hawai’i ranked as the fourth worst state in over-taxing the middle class and the second worst state in over-taxing the poor..
Americans surveyed believed that fair tax amounts would work in an upward gradient that would begin at 2.5 percent for households with incomes earning $5,000 annually and climb to a high of 16.36 percent for households making $2.5 million each year. An overall finding showed that respondents believed that state and local tax systems were more fair when higher-income households pay a greater percentage of their income over lower-income households.
WalletHub found the opposite trend in the average real state and local tax burden. The numbers, which are estimated by the Institute on Taxation and Economic Policy, show that as income goes up, state and local tax burden goes down.
Other notable findings include that Wyoming, Nevada, and Florida were among the top states where the wealthiest one percent are most undertaxed, next to Hawai’i, Washington, and Illinois, where the poor are most overtaxed.