 Welcome back to Think Tech. I'm Jay Fidel. This is Talking Tax with Tom Yamachika of the Tax Foundation of Hawaii. And today's show is entitled, Getting Temporary Tax Fixes with the Emphasis on the Word Temporary, not what candidate Green promised, really important discussion now at the beginning of his administration. More from Tom in a moment. Welcome to the show. I'm Tom Yamachika, President of the Tax Foundation of Hawaii. So here we are in the first months, if you will, of the new administration, and we have the interesting opportunity to compare what the governor's position is now against what it was when he was running for office. And you've looked into this. I wonder if you could give us the benefit of your observations. Sure. I'm your moving reporter today, reporting from the state capital, which is behind me. And I actually, I really was just there, speaking with some of our legislative leaders. The issue we have is that candidate Green, when he was running for governor, made a number of very dramatic proposals, like eliminating the general excise tax on food and medicine. So those were a number of, I mean, that's, that's pretty big. And it was a big promise. And it has to go to the legislature first. And legislative leaders are saying, I don't think we can do this. They are kind of like treating Governor Green like a little kid. Well, I'm trying to think of his experience with fiscal policy. I don't know if he was on the fiscal committees when he was in the legislature. He hasn't talked much in the past about it. He's been focused on COVID and public health issues and making public statements around those issues. But I haven't, maybe I'm wrong, but I haven't associated him with statements about fiscal policy. Has he made statements about that before? Well, just some statements about number one, giving us the exemption for food and medicine. Two, he's talked about the visitor Green fee, which is a tax that he was thinking of levying on tourists when they come here. Of course, locals would be exempt from that. And then there was some mention by his housing people about the empty homes tax, which we've talked about before, that people who live elsewhere but have vacation homes or such over here would be subject to a punitive tax for every month or so that the unit remains vacant and is not rented to like a local person who needs housing. But none of those have materialized, have they? Well, really, it's so early in the process. And typically we see the governor's proposals in terms of bills come in later this month, beginning of February in the legislative session. So that hasn't happened yet. So we still have some time for the governor, but some concrete on those proposals. I thought all bills were supposed to be submitted already. If it isn't submitted now, can it be submitted later? Oh, that happens, that happens all the time. Even if a bill is not submitted by the so-called bill submission deadline, what happens is a number of legislators submit bills with generic titles and no content. So if they really want to have a bill that's not there to foreintroduce, become part of the legislative process, it's very easy for that legislator to hold a hearing, have the bill amended to insert specific content, and then off we go. Why does that strike me? Let me get this straight. The deadline applies to some people, but not others, some bills, but not others. Why is the deadline inconsistent that way? Well, I mean, it's just being prepared. The deadline is over already, right? Right. Okay, anyway, so let's make the comparison. We have now a statement along the lines of changing the tax code in the state of Hawaii, and that's different from what the governor was saying when he was running his campaign. Can you talk about that? Sure. Right now, according to media, the governor is walking back on those proposals a little bit. Now he's talking about giving us a rebate for another year, just like how in this past year, we got rebates of between $100 and $300 per qualified exemption on your 2021 tax return. They're looking at something for your 2022 tax return. Of course, that has yet to be fleshed out. And of course, it's going to go through some changes when it goes through the legislative committees. But the problem with that is that's going to be a one year thing. It's temporary. And the tax issues that we have are more permanent. We see a lot of taxes that start out as temporary taxes, but become permanent. And they create lasting effects. I won't say damage, I'll say effects. And how can you reverse the effects? Not by a temporary measure. And that seems to be what the legislature wants to gravitate towards at this point. Something temporary. You know, but it's all on the background of our fiscal health in general, seems to me. And when you come up with a brand new proposal right out of the January box here to give $300 to everybody, are you really addressing the larger issues about infrastructure and resilience and to extreme weather, which we know is coming? About the homeless, which costs money to fix the homeless problem. I mean, in fact, every problem you can make a list of every issue and it costs money. We haven't brought the employees retirement system up current either. There's hundreds of millions or billions yet due under the law as contributions to the employees retirement system. So all of these obligations, some liquidated, some unliquidated have yet to be paid. And we really don't have the funds to pay them. Well, the prospect of pay them. And now we're going to give $300 to each tax payer where there is no indication that I know of that we're in a kind of situation where we need to do that. It just sounds like it's a it's a spoke for old fashioned popularity. Well, and that's half of what politics is. Old fashioned what you're saying is it's a political move. It's not a fiscal move. Yeah, we have a surplus this year that's been widely publicized. And certainly there are going to be some expectations from voters for lawmakers to do something about that. The lawmakers that I spoke to in the capital say, well, you know, surpluses don't last forever. There's no, you know, it's it's not a recurring thing and I said, you do have recurring revenue is called taxes. The question then becomes, how much of that is you're going to spend. Well, okay, but going back to my point, you're going to have you say we have a surplus. Okay, let's let's assume on a strict mathematical basis, we have a surplus. But in terms of planning, in terms of sucking it away for risks and liabilities, we know are coming down the pike. We're not really a surplus at all. We should be planning for the future. Hawaii is not known for its ability as history of planning. So isn't that kind of sort of a strict interpretation of surplus. We have it right now, we'll give it away right now, and we won't pay the bills. And we won't, you know, socket away for a time when we know we will have to pay the piper. Yeah, that's that's true. But we also have present problems, including, you know, people aren't making it now. They have two or three jobs. They can't pay the bills. So they're buying one way tickets and they're and they're flying out of here. We have a new study from the tax foundation, the national one that just came out. And it highlighted the states that are losing population, the ones that are gaining population and the ones that are both the same. We are clearly in the losing population bucket. And the conclusion that the tax foundation people drew from the census statistics is that people are moving from high tax states to low tax states. And they cited, you know, us as an example of the former. Yeah, I've seen a number of articles about that, including, of course, Grassroot Institute. And I think we all know people who've left and who are considering leaving. They sell their house if they have one and go to another state where life is cheaper. Prices are cheaper and so forth. And it's been happening a long time, but it seems to be accelerating now. But I mean, how does the, of course, when they leave, they're not part of the tax base. But how does this, you know, cash burning a hole in our pockets? How can you keep them here with that cash? What steps, what measures will keep them here? Well, I would think that we need some kind of, you know, permanent type of tax relief. You know, lawmakers from 2008, from 2012, even as recently as last year, maybe a couple of years ago, they were saying, look, you know, we're in a tough situation now. Voters, can you please tighten your belts a little bit? You know, implying, of course, that the pain would be temporary, but it was never temporary. Yeah. Well, it seems to me that people, you know, they leave alive for various reasons. Tax is not the only one. Housing, you know, big thing. And various other problems that we have not solved. What was Josh Green saying during his campaign that he would reduce taxes and buy how much? And the reduction that he was talking about, was that equivalent to $300 per taxpayer or more or less? Well, it's hard to say. He had talked about dramatic changes. And as I mentioned, you know, dropping the GT on food and medicine, you know, both of those are kind of very ill-defined terms. Food can be, you know, you can buy food at a grocery store, you can buy food at McDonald's, you can buy food at a high-end restaurant. Is the exemption intended to encompass all three? Probably not. And then how do you, how do you draw the lines between each of those? We also have existing exemptions. Like we have an exemption already on the books for the GT for purchases made using the, it used to be food stamps. And now there's a more modern version of it, the WIC program, for example. The exemption is already there. And we have credits on the income tax side for people who need the help who are on the lower end of the income spectrum. They can, at least in theory, file for credits on the income tax system. I say in theory, because those aren't the kind of people who are going to file income tax returns. Nor are they going to, you know, pick up and navigate through exceedingly complicated forms, which typically those credit forms are. So when he says this, he doesn't really know how much the state is going to, you know, lose in taxes when he says he's going to offer food and drugs or any of the other things you mentioned. And something happened between the time that he made those statements in the course of the campaign. And now when he is not making those statements about tax relief, but rather just an arbitrary dollar amount refund, I really wonder how that was calculated. So, so Tom, here's the question. What happened? What happened to change this from the campaign to the reality? Well, my guess is that some legislative leaders beat them up, figuratively. Saying what? Why? And saying why? Gov, this ain't working. This ain't going to happen. It's going to cost too much. I mean, even Sylvia may have told it that. Lieutenant Governor Sylvia Luke. She was in there for a very long time as as head of finance in the House of Representatives. And she would, she would know. And she, yeah, she would. She, she's an expert in fiscal policy for sure. She's the chair of that committee for a long time in the house. So, okay, this raises a larger issue. And I, and I'm not saying that George Santos is, you know, on the platform here today in our show. I'm only saying the question is whether the statements made by a candidate, you know, our, our statements we can and should rely on. There's something stark about campaign statements that are made just before the election. And then you get to a time just after the election. And they are remarkably changed. And in the meantime, I'm sure there are people out there. You know, if we did a little survey, we'd find out who relied on those campaign statements. Who thought that that particular official if elected would follow through on campaign promises, you know, promises. Well, there's a couple of issues there. I mean, number one, just talking about an exemption for food and medicine. Those are those are vague terms. How much food is exempt, how much medicine exempt. Is it more or less what's already exempt. You know, we don't know. And second, and the governor has kind of gone down to seeing this, you know, go down this road as well. He's saying, look, I told you I'd fight for it and I will fight for it. Not that it's going to pass, but I'll fight for it. Well, what does fight for it mean? Good question. Maybe the governor's office will testify in favor of it. And then and then it'll quietly die. That's what happens. That's not a good sound. Not a good sound. So, you know, part of this, I would say is the press. The press did play a role or a non role, if you will, in the George Santos case. Long Island newspaper found found him out and published a series of articles about his embellishments. But the big national papers didn't think it was important or they didn't catch it. And so the times never repeated those articles until after the election. The same thing with the Washington Post and other national papers. So the press really didn't do its job here. One Long Island, you know, small paper is not going to be enough to really make people aware. Now, in this case, you know, the press could have been asking questions like what do you mean fight for it? And what are the details of that because the devil is in the details and how do you calculate that in terms of fiscal planning? And the press, I don't know for sure, but the press didn't really ask those questions. They didn't say look, you know, deadline to choose the governor's packages for very X and you will see all details by then. Right. But wouldn't it have been better if somebody in a press conference asked those questions now, immediately, when the statements were made. Oh, I'm sure it would have been. I don't know what the answer would have been. Probably would have been some some some form of, you know what I just mentioned, you know, you will see all details later. That's kind of like the way politics is sometimes. Yeah. But it does it does raise the question of the role of the press in testing statements made by candidates, because I, and I think, if you, I'm not talking about Hawaii necessarily but if you look at George Santos he's probably not alone. The degree of embellishment, you know, that he engaged in was that was unique but I'm sure if you went candidate by candidate across the country you would find a lot of embellishments made on curricula vitae and on, you know, positions and promises would be would be different and the press needs to bear in on that everywhere. Because I think if you have a government that's based on statements during a campaign that that we're not are not going to come true. You're really not getting what you bargained for you're not getting what you voted for. So, has there been, you know, here we are today on think tank talking about these temporary tax fixes. And, you know, comparing them against the campaign promises has the press covered this issue. We're we're you know you're getting it, I think from talking to people but what about the press. Have they been reporting on it. There's been a little reporting on it. I've seen stuff on Hawaii news now for example. It's been very recent so it may be that just kind of waiting for more details before, you know, trying to put their bully pulpit hat on, or, you know, putting putting the screws to one side or the other. You know, the press has a lot of power, because people do make statements that they can't back up, and they don't intend to back up worse. Also, you know, the public has a memory like a sieve. And, you know, the press has a very heavy obligation in these times. And so, you know, I'm thinking it's not just statements made in the course of campaigns. It's not just curricula vitae, you know, what have you done with your life. It's made from day to day. It's statements informing the public where there's such a great opportunity to do misinformation and disinformation in order to achieve some political benefit. And so, you know, the question is, is this limited to campaign promises? Or perhaps it goes beyond that. Perhaps it goes, you know, beyond that in the sense that whatever a sitting official says has to be tested in the same way. You agree. Oh, yeah, I mean, if it's like anything else that people can say later on that what they were mentioning was an aspirational goal, or, you know, a prediction of what life might be. You know, if ABC and D came together, which hardly ever happens. But they don't tell you the latter part. As a voter and as a person trying to deal with the state. You need to be very careful about what you actually do rely on. I wouldn't rely on campaign promises, except to put, you know, more pressure on the candidates slash elected officials to deliver on them. You know, we want to see the goods. Like, what's the bill going to say is the bill going to be approved. And if the bills approved, will you sign the darn thing. Oh, is there any for example, that can be done now, even on the national level. The last couple of presidents didn't necessarily wait for the legislative body. They issued a bunch of executive orders. David Ege was no exception. And he had much more opportunity to do that because of the pandemic. But, but governors do have a lot of power administrative. Yeah, and just the power of the bully pulpit, you know, when they get up there and the state seals behind them and they make a statement. And people on the six o'clock news and the 10 o'clock news are inclined to believe them inclined to accept it as the gospel. And the questions that come out of the press, if there are questions permitted are not necessarily all that probative. And the problem is that you referred to it is that the individual citizen has to apply critical thinking. And if we don't do that, then we wind up getting a kind of a dynamic truth, if you will, a dynamic truth. You heard it here, which changes. And so from press conference to press conference, the world is different. And so somebody has to call that out. And at the end of the day, it's the individual consumer of news that has to call it out. I mean, we can call it out here, but it's up to the individuals who are the consumers of news to do something about it. Are they going to vote differently? Are they going to, you know, support, you know, candidates or people or, or nonprofits as a result. Just as just as some examples. Yeah, and you know, there's also this very interesting issue about re-election. So now we have another campaign. And in that campaign, a given official will say, look at all my achievements. I did this, I did that, I did that, I did this. That's why you should vote for me again. In fact, you have to measure those statements against the promises. If the campaign, if the campaigner promised this, that and the other thing, and he doesn't talk about the fact that they don't come true, that he did not achieve those things. Somebody has to point that out. He's going to tell you what he has achieved. And maybe, you know, with some embellishment, and he is not going to tell you what he has not achieved. So somebody has to write that up. And I don't know if our media is into that. Is it? Well, I mean, it does to some extent. I mean, it's really the duty of the opposition candidate if there is one. And that's perhaps part of our problem. We don't have, you know, we have a lot of uncontested elections. Yeah. Well, I mean, all this is a test of the system, I would say. And it has been happening on the mainland. And when you see people making promises or claims about their background, and it's not true, or it doesn't come true. You have to come up with, A, either the system isn't working, or B, the individual member of the system, the voter has to be his own guardian, or her own guardian. That the voter has to take an active role in vetting all those public statements. And I think we've learned that the press is not always on top of things. And we have learned certainly that the opposing candidate is not necessarily on top of things. So you have to go in there being very critical in your thinking and even cynical to say, well, he just said this and he just said that. Should I accept that? Should I not accept that? And furthermore, and this is a part of democracy, I think, we have, you know, like, lost. And that is discussions with others who are also watching this news. Discussions with guys like you, Tom, where we can sit here and bat it back and forth. And, you know, I don't have to be right. I just want to hear what you have to say. I want to throw propositions at you and see you react. I want to be in a crucible of discussion with you. And in a world of silos, in a world of social media, where one person can speak to millions, we don't have that kind of living room chat. And I think it would be better if we did. Yeah, crucibles of discussion are great for democracy. That's one of the principles that our democracy among others was founded upon. And that would be a great thing. Well, Tom, this is going to be an interesting session. I don't think this is the only area that's going to be of interest. There are, you know, at least a dozen areas in the legislature. And we cannot forget that there should be a connection between the governor's office and the legislature all points during the session. And this administration knows that full well because they both been involved in legislature for years. And so there's plenty to watch. And especially in the fiscal department. Because just as you say, it's not only that people are voting with their feet and leaving because they think taxes are too high. Or on the other side of the equation, prices are too high. Either way, tax is a price. Or that there are problems in housing or public safety or health or infrastructure or environment, you name it. That's the reason why they would leave. And we look to the legislature to identify these things and take affirmative steps to make life better here in these islands. And all of those things should be on the table. All of them cost money. And at the end of the day, fiscal policy is what drives the individual voter citizen to stay here or not. Yeah, I think there are a lot of issues that the government should be looking at. Most are all of them in involved money. And that's why we, among others, concentrate on fiscal policy and taxation. Because that's kind of the big choke point here. I enjoy your choice of words on that. Ladies and gentlemen, he said choke point. We all heard him say that. Thank you very much, Tom. Tom Yamachika, president of the Tax Foundation of Hawaii, doing good work for all of us. Thanks so much. Thanks for having me on the show. Aloha. I'm not sure how the clipboard itself.