 Hi, I'm Mary Ann Sasaki and you're watching Life in the Law. We air one to one-third year in Tink-Tek, Hawaii. We are very lucky today to have a guest, Victor Gemignani, who for a long time worked for Legal Aid, but is now the Executive Director of the Hawaii Appleseed Center for Law and Economic Justice. Actually, co-director with my partner, Gavin Thornton. Okay, co-director. So we want to get that straight. We're on a downwards trend of my service in the program over at some point I'll retire, so he's my secession. Okay. Well, we'll have to have him on, too, sometime. He's a super guy. So we want to talk a little bit today about, well, first of all, did you hear that the federal court struck down the executive order? Here? Yeah, yeah. That's wonderful. I know it was up today. I don't know if you know the judge. I know the judge. Derek Watson. She's a relatively new appointee. Yeah, he's young. Yeah. Wonderful. Wonderful. Yeah, that just came on right before we... It's great to have it happen from Hawaii, to be frank with you. It makes a statement about who we are. It's kind of... Yeah. It's nice to be at that stage. It induced pride in me. I thought, you know, I was proud that it was my state that was making a statement, so I was, yeah, I was pretty happy about that. So it was like hours before it was supposed to go into force, so, effect, so, yeah. I applaud Doug Chin for bringing that case in. He did it with alacrity, too. He did it really fast, right? I know. He really did a great job. He really did thank you, Doug, for the Chin. But there's also a good article in the Civil Beat today about other types of issues he may be interested in, and other Democratic attorney generals in the United States may be interested in terms of pushing back against some of what I consider a fairly extreme agenda of the Trump administration. It is an extreme agenda. You know, I was involved, I told you, I think, earlier with representing marijuana purveyors and Hawaii medical marijuana purveyors. And you know, I really think that one of their agendas, one of Jeff Sessions' agendas, is going to try to be a pushback on that. Guaranteed. Guaranteed. Guaranteed. I mean, it just goes along with the whole package of... Guaranteed. But it's like a lot of issues that have changed over the years. As people have, I think, matured in their thinking, gay marriage is a classic example. Slowly the tide changes against what used to be. Right. And I think, to be frank with you, better for all of us as those rights are recognized and enforced. I think so. So ultimately I think Jeff Sessions is going to be on the wrong side of law, the wrong side of the history. He can't push back again, but I think the results of where we've been have been. Right. I don't see how you unwind that, you know, you chip away about it, make it a little more difficult than the states, obviously, maybe doctors a little bit, but for all intents and purposes, the population, that's been, that was a decision I think after Colorado started decriminalization, a state issue. Not necessarily as much of a federal issue as it used to be where they used to have exclusive domain. Right. Now it's a state issue. And when you get into the states, you're going to have a series of different decisions made by the local population and local political structure, which I think are more appropriate for their local population. And therefore I don't think the feds are going to have the energy or the handles that they used to have or the backing. Well, that's good to hear. That's good because people are really, you know, pretty concerned about that because it's really fledgling here, too. So I look through the Reagan administration. I think we all did, and I was in the Legal Services Corporation inside Washington, the Legal Services Corporation, when he decided he wanted to fund as one of the top priorities, the entire federal program that supports legal services, legal aid funding in the country. So I was up close and personal to watch exactly what he did in terms of trying to get that done and the resistance he met and his failure ultimately to be able to succeed in that agenda. So I've learned a lot of things through that transition and that's that the high point may be the inauguration, although in this case the inauguration speech was such a disaster. I'm not even sure that was always possible. I agree, you know, when people are so disturbed by this election, I was a teenager, but I remember Nixon's election and everybody was just consulate. I mean, it was really, really hard to take, and I said, you know, we've been through this before. We really, really have. You still need a Congress and you need a cooperative Congress and although it may be totally Republicans, I like to see them thread the needle in this healthcare, particularly in the Senate. It's impossible to do. I don't think so. Same as Clinton tried under Hillary Clinton when she first came in the Clinton beginning of the Clinton administration back in the early 90s. She tried for two years to get healthcare through. It just didn't go through. It's highly complex, especially when you're talking about eliminating a vast number of millions of people off the rolls and in fact increasing the cost significantly on some vulnerable populations, particularly the elderly and the low income. You just can't do that anymore. So bottom line is I think the prayer that they're going to be able to significantly change the Affordable Care Act is really not going to happen. No, I don't think so. I think it's a lot of talk, but I don't think they'll, because they have pressure from the left and the right. Exactly. Exactly. Pretty much the same thing the Democrats had when they pushed it through. I guess so. 10 years ago. I guess so. But now we have something, so it's, again, it's hard to go back, right? Exactly. Exactly. It's entrenched in people. People have an expectation. That's fair. You've got a lot more people on healthcare, which we all want, maybe cost some people more money, but we needed to have coverage for as many people as we possibly could in this country. I personally think healthcare is such a critical component of just life that it's entitlement. Yeah. And we ought to have a system that provides adequate and timely and appropriate care to our citizens that are vulnerable, which is a challenge for health. I mean, I've had seven health issues in myself in my life, and they come on with no history or warning, and they can be absolutely devastating. I can't imagine if my health problems I've gone through, if I didn't have co-op competent medical services, I would be hopeless. Right. I'd be dead. How do you do that? How do you means test a critical right like healthcare? Right. It's like a fundamental right. It's a fundamental right. I believe the right to housing is a fundamental right. Although the court doesn't agree with me. I never will, but I agree with you, but it's never going to happen. So let's talk a little bit, you know, as I said, we had an interesting discussion at the women's meeting that I attended a week ago about economic rights. And, you know, this was a group of, you know, upper-middle class, you know, very well-meaning liberal women, but there was one woman who was working class, and she's the one who raised her hand and said, you know, we need to talk about how all these, all our civil rights are impacted by economic disparity. So, and I love the quote you have on your page by Barbara Ehrenreich, the poverty is just a lack, a shortage of funds. It's not a character flaw. How do we get to the place where we, back to the late 19th century, we sort of, you know, where it's... Not that difficult. If you understand the core problems on economic justice in our state, and we all suffer from them, and by the way, we're probably all aware of them. We just hadn't necessarily connected the dots. But although we all suffer from them, the low and moderate income suffered even more because of the three factors. The three challenges are really simple. Highest cost of living, state in the nation. Highest cost, or maybe second highest to New York, may give you that, in terms of shelter, electricity, food, 162% more than people in the mainland pay as an averageist in food. So the stats on cost of living in the state are off the charts, the worst in the United States. The second factor we all suffer from economically is we have the lowest wages paid in the United States. It's amazing. The factor in cost of living, our minimum wage that we pay right now, even after three bumps, is the lowest in the United States because cost of living permeates the entire thing. I'm sure. That was stunning to me when I came here. Stunning to me when I came here 25 years ago also. Yeah. It's part of the price of paradise. We accept many, many lower wages for... I'm not sure why, but it happens. I think our system basically has grown up that way for a lot of different reasons. It also is a little bit of a hedge on growth, population growth. Right. I think it is a discouraging... It's such an incredible place to live. The bottom line is we still have to live. We have to pay less, significantly less, the worst in the United States, I might add, as an average in terms of the wages we're paid in comparison to people on the mainland. The third issue is we have the second worst tax policy in the United States that hits the low and moderate income people. We're the only state but Washington state on the mainland that is worse in terms of taxing our low and moderate income people because our GET is 45 percent of all of the revenues raised in the state. Half of the entire budget of the state comes from GET. It's the broadest GET or sales tax in the entire United States. Wow. And that takes much, much more money out of the lower income because they don't have much more money to spend. Right. And it leaves us with a situation with the people in the lower 20 percent of our income bracket in our state pay about 13 cents out of every dollar in taxes. The people at the top 20 percent pay about 8 cents, almost half of what the lower income is paying. So you have the highest cost of living. You have the lowest wages. You have the second highest tax policy in the United States. Those are the challenges. The economic challenges go to the core of survival for all of us but as I would say for the low and moderate income people even more especially seniors, retired seniors that are fixed income or disabled individuals. So if you want to solve the problem you have to start taking a look at each of the components of that and seeing how we dig ourselves out of this hole we've created. Very difficult. Housing obviously is one of the critical components. We have 43 percent of our people in the state are renters. It's the highest cost burden state in the nation which means our people are paying more for rent than any other place in the United States. Here's a figure that will knock your socks off. Seventy-five percent of people that are at poverty in the state are paying more than 50 percent of their income on shelter. Oh, remember, we're talking poverty which is probably $14,000, $15,000 a year. That's going to leave them after taxes. Somewhere in the neighborhood of $5,000 or $6,000 to support three to four kids for the rest of the entire year because the rent is just so enormous that they pay. We've got to deal with affordable housing in a serious way and there's a whole series of things we could do in that arena. And there are people that are doing it, I think. Yeah. But it's very solid and steady. The political system, to be frank with you, is playing catch-up ball on affordable housing. It was an issue in Hawaii back in 2001, 2002, a lot of concentration. I thought after that it went to sleep and what we started talking about is affordability of home ownership. So the entire emphasis on affordability, if you look at all of the political commentary, all of the political pledges, it's on affordable ownership. Well, 43% of our people are renters. They're never going to, most of them are never going to aspire to own a house. They need rental. And we haven't built rental units in this state. No, there's a real shortage of rentals. 30, 40 years has not been any rental housing built for the low income. In the meantime, our housing prices have gone up. Our wages remain low. And the housing gap between what you bring in and what you can afford has just gotten larger and larger and larger. So I think the political system now, because I think a lot of reaction from people in the street who are worried about the cost of affordability, their families, the kids haven't go to the mainland because they can't afford to live here, the whole issue of homelessness, which is the worst in the United States, all driven by homelessness, all driven by cost of housing, has started to let the politicians know that affordable rental housing is really where they've got to put their energy and their money and their property. And there's starting to be some dialogue about that. We've, Apple City has introduced a lot of models that are aimed to bring the cost of housing significantly like accessory dwelling units being built in people's backyards or micro units being the way that low income housing, moderate income housing is built in the state through the transit-oriented development. So a lot of work is being done. On economic justice in terms of taxes, and that's really the only way you can get quick money into people that are suffering at the bottom line, change their taxes, stop taking as much money out of their taxes. And we've had a series of tax bills of the legislature for the last three years. This year, I think there's a lot of energy. It's gotten more testimony than any bill ever on these issues, including minimum wage. The testimony has been pouring in for people interested in supporting it to be able to raise significantly lower the tax rate on three different ways for low income. Let's talk about that. I'm going to take a quick break and let's talk about those ways when we come back. You're watching Life in the Law, Mary and Sasaki. Stay tuned. Hi, I'm Chris Letham with Think Tech Hawaii. And I'd like to ask you to come watch my show, The Economy in You, each Wednesday at 3 p.m. Aloha, everybody. My name is Mark Shklav. I'd like you to join me for my program, Law Across the Sea on thinktechhawaii.com. Aloha. Hello, and aloha. My name is Raya Salter, and I am your host for Power of Hawaii, where Hawaii comes together to talk about a clean and renewable energy future. I'm so excited to be here with you to talk about some of the most important energy issues of our day. And most importantly, who can we bring together? Energy engineers, artists, musicians, accountants, advocates, young people, who can we bring together to talk about how we can make this path together by walking and reach 100% renewable energy? Please join me Tuesdays at 1 p.m. for Power of Hawaii. Hi, I'm Mary Ann Sasaki. I'm talking with Victor Gemignani about ways to reduce taxes on lower-income families, yeah? I think that's complicated. OK, so explain it to me, because it sounds pretty complicated to me. Not of these. If you start to understand tax policy, we started about three or four years ago when I was new to us. Oh my god, tax policy, how complicated. Really not that complex when you start to break it down by different solutions that you might be able to find. That are replicated in the mainland, so you're not discovering the model here. And there are some here that just have gone to min atrophied. So there are three major tax credits that are available to low-income. Tax credits mean that you get money back from the government. If you pay, first it goes to pay whatever taxes you owe. And if there's any money left over, you get it back. Refundible tax credits, they're the key to bringing immediate dollars in a low-income family's lives, bang, right away. First is something we got through the legislature two years ago. It was on GET. And it allowed a tax credit for low and moderate income individuals that make less than $30,000 a year under our plan was raised to $60,000. To be able to increase the low-income GET food credit, everybody gets the right to take this credit, depending on what their income is, from $85 where it had been stuck since 2008 had not changed, up to $125. And that's per exemption. It may not seem like a lot of money, but $50 times three, mom and two kids, $150 coming in all of a sudden just does open up options for pay-pass bills, get your kids some needed sneakers. Absolutely. Just help a little bit. Give you a little bit of breathing room. That's the Menini tax rate that was able to get through. This year it's being sunsetted. So the sunset has to be ended. And we have to continue to have that. When the legislature passed the increase, they only passed it for two years. So we have to make sure that the sunset continues. The second one, which is a big one, is a low-income renters credit. That has been in existence since the 70s for the same reason. These credits, by the way, exist because there's a recognition that always has been a recognition that, because our government depends upon GET so extensively to raise its revenues and the rate is so high in comparison to other states, they had in some way ameliorate the regressive nature of these tax increases by giving the low-income, moderate income some tax relief. And that was the way we were going to raise GET, but we're going to give them some help so that they won't be paying everything. Up front, they will, but they'll get it back in tax rebates. That tax credit for low-income renters, defined by, as anybody that has $30,000 of income now, under us, it will be $60,000 if the change is done, they get $50 per exemption in the 80. That $50 was last adjusted in 1981. It's now worth about $18 based upon the inflation that's occurred. So it's pretty much a meaningless tax credit. If you adjusted it just for inflation, regardless, it's not even taking about what we'd like to do in terms of the struggle, people are just adjusted for inflation or go about $150 credit. Again, you have a mom with two kids, low-income renter, paying more than $1,000 in rent, which guarantee they are, making less than $60,000. That's a $450 increase they're going to get in terms of their paying off their taxes or getting it back at the paycheck. That can make a meaningful difference. Can make it on a $14,000, $16,000 before a tax of salary. That's a lot of money, especially when you have two or three kids. The other, the big one that the state has looked at for a number of years, but always rejected the state legislature, but this year maybe the year, is creating a state EITC program, Earned Income Tax Credit Program. Yeah, what is that? Federal EITC program was started by President Nixon. We were talking about President Nixon before. President Nixon made a decision that he wanted to help low-income wage earners, people that were working. But he didn't want to do it through a welfare program. So he did it through a tax credit, and he called it the Earned Income Tax Credit. It became President Reagan increased it, because he loved it also, goes to low-income wage earners, people that are working. And secondly, President Clinton made it the top domestic agenda in his term. So right now, about a quarter of a billion, that's a B, a quarter of a billion dollars comes from the federal government every year into pockets of low-income wage earners in Hawaii, a quarter of a billion dollars. It's an enormous federal program. And it goes again only to those that are struggling between $14,000 and $25,000, $28,000 a year. You can get it up until $52,000, but the amount you get is manini. The amount of money that goes into a family of four that's earning $14,000, $16,000, $18,000 is, believe it or not, $6,200 a year from the federal government. That's a 30% to 40% increase after tax dollars to a family that is working minimum wage and barely surviving. So the more family you have, the more children you have, the more your tax credit will be. So it's an enormous tax credit for that, and it's targeted, it really targeted at a population that is struggling the most, all struggling, but that's the population that is really struggling. So it's a way the state can spend precious money by funding a state EITC program, same as the federal EITC program. Same people get it, and the amounts they're gonna get is only a percentage of what they get from the feds. The state EITC programs are funded by 10% or 15% or 20%. District of Columbia has one, it's 42% of what the feds pay, they pay you. We're going for 15% increase here, our state-funded program. So if the state were to create a state-funded EITC program, they would join six other states, 26 states in the majority of states now have adopted state EITC programs as the easiest way to get money out immediately to low- and moderate-income families who are a worker, and normally workers are the most sympathetic of all, because our wages are just so low and minimum wage just doesn't pay them even close enough to get out of poverty. They're still working in poverty, they work 40 hours a week, they're still 4,000 under poverty. I know, that's the whole argument, right? People are supposed to, that's a whole welfare argument, right? If you're working your... Work 40 hours a week, not to be in poverty, we do, our minimum wage leaves them in poverty. A lot of low-income wage earners, and I'm not taking truck with low-income employers that pay low, I think they ought to pay more, but that's their issue in terms of economics. I am taking truck with the state that has an opportunity to give back money that they're collecting from low-income in a way that will really make a difference in families' lives. And by the way, if you were to add those three figures I just gave up, you're talking probably about $1,500 for a mom and two kids earning 14 grand, 15 grand, 16 grand after tax dollars, they'll get in their pocket, after taxes, 15 bucks in their, 15,000 under in their pocket. It's revolutionary in terms of the impact that it'll have. And when you take a look at EITC programs, health benefits for the families that get EITC go up, educational proficiency goes way up. Because that's what people spend money on. They don't spend money on. They spend money on necessities. Exactly. That's sort of a myth that people, you know. Exactly, exactly. This is a child's self-esteem when they have a few things that their friends have. They can go to a movie periodically. They feel better about themselves. They learn better. It's just that economics basically is really clear. If you take a look at the economic, the great performance in schools, private public, it doesn't matter. It's very much graduated based upon the economic place someone is in. I'll give you another issue by the way. There's an issue that came up about three years ago with the Affordable Care Act. As there is more requirements for evaluation on what hospitals are producing. What is the effect on someone's lives? So the hospitals and the health industry started looking at things called the social determinants of health. And they found out that it's easier to tell what a health person's gonna have by knowing what their zip code is than knowing what their DNA is. Well, that makes a lot of sense. Exactly, it's where you live, what foods you eat, what schools you go to, the safety of your communities, how you feel about yourself. That affects your health, the stack of stress in your life. That affects your health. So now the health industry is recognized and bought into completely. The whole idea of social determinants of health. Well, those social determinants of health can really only be affected by more affordable housing and more income in people's pockets. So bottom line is you go again back to economic justice in the ways you can do that. So this year, we have put a money generator into our tax bill. And it's gone through the house and gone through the Senate. So it now will be going through committee. We're very excited at this point. We have a lot of testimony behind it. And the tax bill basically to raise the dowdlers that are required to be able to fund this private to be a fat 46, 47 million dollars is a reintroduction of the tax on the top 1% earners in the state. We used to have that tax as of last year, but it was out of the sunset by the legislature. Really? About 50, 60 million dollars went back to the top 1%. 93% of that 50, 60 million dollars is the top 1%. The top two or 3% got a little bit also. So basically we're suggesting to the legislature that they go back and reintroduce that tax on the most wealthy in our community and allocate that tax for low income economic justice issues. And we're starting to get a number of people that would be impacted on it, wealthy individuals in the community coming out in the paper that we have on the other day by Crystal Rose and Randy Moore, saying you should tax me more. I can afford it. You should tax me more. So we're hoping that more and more people that are fairly well off in the community will start to saying, I can afford a little bit more taxes as long as it's gonna be earmarked for the people that are struggling the most. That's what, yeah. I never understood the press not to pay any taxes, I mean it's the price we pay for fundamental civil roads and schools and libraries and- And our lifestyle. And our lifestyle, right. Where we live and how we live it and who we live it with. So, you know, but so do you, are you optimistic about that? First time in four years I've been optimistic. Really. Because there's a revenue enhancement. This legislature is very hard to get money that hasn't already been allocated from some source so you don't have a target how you're gonna raise it. You try to go from revenue dollars that are already in the system and divert those for some of the purposes we're suggesting is a real kickback from the legislature. I wish that was not so, but that's true. So one of the only ways you can really push agendas like this is to have some way you're going to suggest they can raise money to pay for it. So it's revenue neutral. And this bill I think has a clear way of doing that. In fact, it'll raise a fair amount of money. Their estimates are as high as $75 million that'll raise an art cost where our program are only about $45, $46 million. So there's even money left over for other purposes that they think may be necessary. Wow, that would be cool. So I think if this legislature has the will and hears enough from the population that we really have to do something about this population and we're gonna continue to say the same we see every day in our screens and all of us. So we're hoping that this year will be the year that they finally say we're gonna put some serious money in the low income population and start to reverse the trend we've been doing ever since God does when. Yeah, I know. When Reagan, everything goes back to Reagan, right? We'll go back farther, but I think where I come from, I feel it about pretty much that's a change to the whole system. Yeah, he unwound everything. It was the tax reform he did. It was radical in terms of reducing the tax rates on the highest earners. And people's perspectives on what's okay, what's okay to, what's more. Yeah, right, exactly. When they take a fair, they fear what's fair with me, not fair with what's being cut out in terms of the system. We also have government sometimes that's not as efficient and effective as it ought to be so people think they're wasted money and I can see the arguments that they make about why tax me more when it's gonna be wasted. But if we can divert it, if we can earmark the money so it's being given for a particular purpose that everyone agrees is essential, then I think we have ultimately a significant majority of people will say let's go that route because we know what's gonna happen with this money. It's not gonna be eaten up in other government programs. Beauty by the way of tax policy is you can get money to low income populations in a number of different ways. You can give them cheaper housing by subsidizing housing. You can give them things like food stamps or welfare. People have to know about those programs. They have to feel comfortable applying for those programs. They've got to go to a bureaucracy that makes an application for those programs. They have to wait for a decision from those programs. They have to appeal a wrongful decision from those programs and they then have to get the check to actually spend the money. That's an expensive process for the state to go through. Tax policy doesn't go that way. Tax policy goes directly, it goes to, there's no agency that touches and accepts department of taxation. Once they get the 1040 that you file or the 10, 9, 11 in the state, mathematics is clear, the check goes right out. So it's not, there's no siphoning off of the dollars for the bureaucracy nor any inefficiencies as the bureaucracy churns through its process of making decisions that they ultimately have to make. That's fascinating. So it's the best way of all. Tax policy is the most radical way to reorganize. Absolutely. Easiest, clearest, fairest, because you can measure what's fair and what's not. They said before, the wealthy in the community of paying eight cents per dollar are low in moderate income paying on 13. You know what's fair. You can value it. You can judge as you go through how much success you're obtaining. It's a great area to spend a lot of time in if you're interested in economic justice. Well, I am, and you know, I'm interested in taxation too. So I really appreciate this discussion very much actually. And we're coming to the end of our show. I want to thank you so much. As I said during the break, I want to thank you so much for many years of public service. It's very laudable. And thank you for coming on the show. It's been fascinating, riveting actually. Thank you. Real pleasure. Thank you very much for the invitation. If anybody's out there wants to participate, take a look at our website, Hawaii Appleseed Center for Law and Economic Justice. The bills are spelled out. Reports are written. Quite a wealth of information for people that want to be participating in the process this year. Good.