The following was written by Rep. Choy and printed in The Honolulu Advertiser, Monday, July 20, 2009. Link here.
Scaled-back tax credits still allow sector to grow
The Hawai'i high tech community is up in arms over the passing of SB 199 CD2. This bill limits (not abolishes) income tax credits on new investments in a Qualified High Technology Business (QHTB).
The restructured high technology investment income tax credit is still very generous to serious investors who believe in the future of the high tech company, but it is no longer attractive to people who only want to avoid taxes. For every dollar invested, one dollar of income tax credits is given for Hawai'i state residents only. It gives a credit for up to 80 percent of a person's state income tax liability in 2009 and 2010. Any investments in a QHTB prior to May 1, 2009, will not be affected.
The high technology community is doing an admirable job trying to diversify the economy by raising wages and bringing local people home. As for me, I have two kids working on the Mainland; one is an attorney and the other is an auto mechanic, and I would love to have them come home, but they have jobs there.
Diversifying the economy with industries like the high technology industry is very important for the future of our state. No one can argue against that. But we are in a very troubling economic time, and we have to do what is best to make up a severe budget shortfall.
A constituent wrote to me stating that as his business deteriorated with the economy, he shrank the size of his business, and he felt that government should do the same. But, unlike businesses, when times get tough, the cry for government services gets even louder. Most state-administered programs were created because of an outcry from the people. To dismantle these programs is extremely difficult.
When the high-tech community was so vigorously lobbying at the Capitol, they should have looked to their left and their right to see all of the people who were trying to save the basic safety nets for the people of our state.
Throughout this legislative session, we have made tough choices that will adversely affect all of us taxpayers, government workers, human services, health, education and other very worthwhile causes. We have cut the budget by $800 million over two years. It has not been pleasant, and no legislator takes pride in causing any pain.
In the beginning of this session, I felt that in these economic times the legislators will undoubtedly have to anger some people in order to do the right thing for the good of most. But we are the ones who must make these difficult choices. We are by no means out of the woods yet; we must be prepared to make more sacrifices.
In his Opening Day remarks to House members, Speaker Calvin Say said, "Remember, almost all special interest groups, whether for profit or non-profit, have organized memberships with a lobbying presence at the Legislature. Ordinary taxpayers, however, have none. They have only you and me."
By the action on SB 199 CD2, the Legislature has chosen to serve "ordinary taxpayers," and not a special interest group.
The high-technology industry will survive, just as we will overcome these troubling times. From what I have seen of the tenacity and perseverance of the tech community, they have what it takes to ride out this storm and prosper, even after the passing of SB 199 CD2.
Isaac W. Choy represents District 24 (Manoa). He wrote this commentary for The Advertiser.