Budget writers may target tax refunds

I can’t see getting too exercised about reports that the Abercrombie administration is backtracking on vows not to follow Linda Lingle’s example and kick state income tax refunds into the new fiscal year to reduce this year’s deficit.

Yeah, Gov. Neil Abercrombie earlier derided Lingle’s policy and said that to follow suit would only extend the pain to taxpayers that she caused.

But the fact is that there were few reports of serious hardship caused by last year’s delay, and doing it again may be the least disruptive way to deal with a budget deficit for the remainder of this year that is suddenly more than $230 million after the economic fallout from the Japan crisis.

Delaying refunds again would keep us in a hole and at some point we’re going to have to bite the bullet and get tax refunds back on the usual schedule, but there’s a fair argument that it’s best done in a rebound year when we have a more robust revenue stream to cushion the cost.

Administration budgeters say delaying refunds isn’t their first choice for making up the revenue slide and if they come up with better ideas, that’s fine. But it’s not an unreasonable option to keep open if it looks to be the least painful way out of this fiscal year.

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10 Comments on “Budget writers may target tax refunds”

  1. WooWoo Says:

    Governor Abercrombie and President Obama are learning the same lesson: it’s much easier to Monday morning quarterback as a candidate than actually make the decisions as the executive.

    While I would rather see my refund sooner than later, I don’t think that there is anything wrong with pushing them to the end of the legally mandated window. I did not object when Lingle did it, and I will not object if Abercrombie does it.

    Likewise, I do not disagree with Pres. Obama’s action in Libya without consulting congress first. If he had waited a few more days, the point would have been moot; the rebels would have all been dead. Today, options remain available. We can stop our support, or we can continue. We can and should have a legitimate debate on our future actions in Libya; but if Obama had waited, the only debate would be arguing over exactly how many of his own people he massacred.

    Candidates Obama and Abercrombie, however, would have raked their present day selves over the coals for these sensible actions.

  2. WooWoo Says:

    Clarification: “he” refers to gaddafi when speaking of the massacre.

  3. Michael Says:

    Hawaii’s People wanted change, they got a New Face.
    … -… … Same Beauracratic Standards.

  4. Doug Says:

    Isn’t it safe to assume that many people due a tax refund would have filed as soon as they got all their documents together? I sure did, and I received my refund a few weeks ago.

  5. Capitol -ist/WassupDoc Says:

    Although my SigOth is a CPA specializing in taxes, we never file anywhere near the regular deadlines because he’s too busy.

    Nowadays, he rolls over the previous year’s tax refund to the current year’s owed taxes because I am self-employed. However, back in the day when we’d both get paychecks, he would adjust our withholdings so that at the end of the year, we wuld get maybe a $50 tax refund.

    Perhaps more folks should do that during these hard times.

  6. OahuSophist Says:

    But Dave, I thought going back on campaign promises was a mortal sin?

    That you seem ok with this renege, but not ok with a renege on a GET increase suggests to me that it’s not so much the principle of a promise that is important, but what that promise is, rather, that has the potential to get you riled up.

    For the record, I won’t complain (too much) if the Administration decides to hold back my tax refund for a second straight year. Though I’m unemployed and that little extra cash would be helpful, I certainly don’t plan my budget with the expectation of a tax refund, so I don’t necessarily “need” it.

    That being said, if your motivation to support, or rather, not oppose the idea of postponing the distribution of tax refunds for the sake of balancing the budget, why decry the Governor for even suggesting he won’t oppose an increase in the GET. That you don’t yourself deride the Governor for his previous derision of Lingle suggests to me that it’s not the idea of a promise broken that gets you hot and bothered so much as the topic of that broken promise: raising the GET.

    To me raising the GET to increase revenue for the state is an option that makes a lot of sense. An increase of just 1% would, reportedly, raise more than $580 million in the first year. The State could start collecting that money right away and would go the furthest to balance the state’s budget shortfall. It’s true the GET is very regressive, but an increase could be offset by giving income tax refunds to those at the lower end of the income spectrum that would be hurt the most. It’s also important to point out that a significant portion of the GET is paid by “nonresidents.”

    I think if you’re opposed to an increase in the GET, you should just say so, rather than make a principled argument about broken promises since it appears you’re not willing to make that same principled argument here.

  7. Kolea Says:

    Let me borrow your title from your latest posting and tweak it for use here:

    “More Honest Talk Needed on Budget.”

    Delaying the tax refunds is a gimmick. And, more worse, it will contribute to our economic stagnation by taking money out of the pockets of consumers, delaying a surge in consumer spending. Tax refunds, along with birthday money and gambling wins, tend to be plowed back into the economy quickly. They have a “stimulus” effect on the economy. Delaying refunds delays that stimulus.

    Most of the discussion about the budget crisis focuses on the surface phenomenon, the shortfall itself. That is pragmatic, as the shortfall is very real, very serious. But we DO need to keep in mind the underlying prolonged recession– and its causes– if we want the situation to improve.

    The root cause of the recession was that the stagnation of real wages for the vast majority of middle and lower middle income Americans, remained stagnant for the past 30 years. Money was made during that time, but America had re-embraced the economic “ethics” of the “Robber Baron” era. Almost all the gains went to the very wealthiest Americans.

    This is not simply a “tut, tut, tsk, tsk” moral interpretation of what happened. This is a practical explanation of the BAD economics which led us to this point. Most of the economic “growth” of the past decades was hollow. It was an unsustainable BUBBLE. In order for the American consumers to be able to buy goods and services, the system NEEDED easy credit to provide purchasing power which real wages denied consumers. This easy credit was supplied by borrowing against people’s homes and was unsustainable.

    The collapse of the real estate market was inevitable. The Bush and Obama administrations both intervened to prevent the collapse of the banking system and to save Wall Street. And the Market has rebounded tremendously. But the typical American citizen/ comsumer/ woker has NOT recovered and our needs are largely ignored.

    Unless or until we re-commit to economic policies designed to promote a higher degree of income equality, the hollowness which suppresses consumption, will continue to stall out recovery. Real earnings for “regular Americans” has got to increase if we are going to return to a healthy economy.

    (We can have honest discussions about the effects of “globalization” on American industry, wages and salaries, but those processes simply complicate the task of working towards greater equality. They do not make that discussion unnecessary.)

    The Washington D.C. debate over the economy has been unsatisfactory for years, but at least the discussion bore some resemblance to reality, even as the needs of ordinary Americans were largely ignored. But TODAY’s Congress is taking a vacation from reality, indulging in Tea Party pseudo-populist fantasies much like grown men might go to a Baseball camp and dream of being pro ball players.

    Our State has many fewer macro-economic options open to us than Congress. But we can still pursue remedies which deal with both the immediate budget crisis AND the underlying inequality economic crisis. Hawaii has a LOT of very rich people, both as permanent and part time residents. A recent study showed we had the HIGHEST incidence of millionaires in the country. (No, they are not counting the inflated value of personal homes in counting the “millionaires.” Hawaii is (perhaps) the most desirable place in the world to have a “second home.” We have clean water, good climate, political stability, interesting cultural events, people and ultimately low taxes for wealthy people. Members of the international elite have been buying luxury homes and condominiums in Hawaii for years and the implications of this new wealth, largely “stealth wealth” has not really entered into our thinking. In almost any other community in the US, owning a luxury home or condo would result in relatively high property taxes, but not in Hawaii, where –uniquely among the states– our schools are NOT financed through property taxes. Hawaii is one of seven states which gives preferential treatment to capital gains. We have one of the lowest corporate income taxes in the country. And if wealthy people live her part time, or slip in and out unnoticed, without calling attention to themselves, they can escape paying very many taxes in Hawaii.

    While our low property tax regime may have meda sense in the post-statehood days when we had a stable population and expanding middle-class, it is time to revisit the question in light of the new economy, the new demographics , the new structure of wealth and EXTREME inequality.

    Abercrombie’s delay of the tax refunds MIGHT be justified as a temporary (partial) fix to the immediate crisis. But unless we deal with the underlying income inequality and adjust our tax policies to capture more from the wealthy members of our society, it is only a gimmick and an evasion.

  8. David Shapiro Says:

    Sophist, not raising the excise tax was a core campaign promise, immortalized in his Recovery and Reinvestment Plan which said, “The general excise tax will not be raised. Given the public’s lost confidence in government, no reasonable argument can be made to raise the GET.” He stated on other occasions that this promise was “unequivocal” but started wavering long before the COR lowered its revenue projections or the Japan crisis occurred.

    He bad-mouthed Lingle on the tax refunds, but I don’t recall it being any kind of core promise. I’m not promoting this option and it’s not necessarily the one the administration will choose.

  9. Michael Says:

    People laughed and said who needs Tourism. Aloha Airlines and ATA closed and thousands of people got laid off. Domino effect that cost other companies to go out of business too. Hawaii will always be dependant on Tourism. Money made in Hawaii should stay in Hawaii.

    Depending too much on Japan and China is saying, we owe you money but come spend your Yen and Yuans here.
    Come to Hawaii for free and let it pay the debt we owe you. I don’t see this happening. Most of Hawaii businesses are owned by Foreign Countries or out of State companies.

    We also need to regulate immigrants from other countries coming into America to work but this is not happening. Not from other States of America but other countries. That is how our Government should be run. Take care of citizens first. Get more Residents of Hawaii working first. Immigrants should be allowed to live here only if they have a secure job first.

  10. shaftalley Says:

    is it possible that president obama who has been awarded the nobel peace prize,has killed more people in afghanistan,pakistan,and iraq than quadaffi has killed in his own country?

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