 Okay, we're back, we're live talking tax with Tom Yamachika here on ThinkTek at 10 o'clock on a given Thursday. We're so happy to see him because he comes up with ideas we need to know about, welcome Tom. Thanks for having me on the show, Jay. Again. You know, one of the, this is one of the great topics freely is the time tax, the time tax, which is regressive. The time tax is really a bureaucratic tax where it's an us and them mentality where people who are entitled to benefits can't get them because the bureaucrats make it too hard for them to get. And I mentioned to you before the show one theory about how the base was created and is the base for Trump is that there's frustrated with the government who tells them they're entitled to certain benefits and then makes it so hard they can't get the benefits. This country is loaded with that and this state is loaded with that. How much of that do you agree with Tom? That's absolutely right. Let me first explain what the time tax is. Not only does the government take our money but it wastes our precious time. And it does this by putting into the various benefit programs and not only that, but even tax stuff where you have to pay them. A lot of it is, well, you need to learn about this. You need to acquaint yourself with this, you figure it out kind of a mentality and even if you do, you go down to the state office or whatever office you're going to and you gotta wait and you gotta wait and you gotta wait. All of this leads to drains and our precious time and resources. Let me give you a for example. The Symbol Beats Denby Fawcett told the story of one unemployment claimant who called the unemployment office 22 times. On 21 of those 22 times, nobody answered. On the 22nd, at least the person got through to somebody and then the guy asked his question and the person on the other side, oh, goodness me, let me talk to a supervisor. And then this person's put on hold for an hour. I don't know if he got the answer that he wanted. I would have been disgusted long before then and I wouldn't have been able to take it but apparently this guy did. But it's shameful. I don't think anybody should be subjected to stuff like this. I mean, when the software companies were in their really phase, they used to submit subject customers to this. I remember being on hold for two or three hours, talking to a person in Sri Lanka or Bangladesh or wherever it is and said, okay, I'm going to charge a credit card now and then please wait for a representative who will answer your question. And then that was another three hours. So fortunately, I think the software companies by and large have started to get away from that model but it still remains in government. Well, it still remains in the software companies. I deal with software a lot. Think Tech uses something in the order of 70 software programs and we have to make choices. And part of the elements of choice is is this company going to respond when you ask for support? And my own feeling is that we the public are responsible to put their feet to the fire. So when they don't provide support, I move on to another company and I tell them and hopefully there are a lot of people out there doing that. And hopefully the software industry will recognize that if they don't provide prompt support, courteous support, effective support, not from far away call centers where nobody knows how to answer you. If they don't provide that, they're gonna fall behind in the competition, especially now. But this is an us and them mentality. We are going to put as few resources together to help you as possible. We are gonna treat you as the enemy. We don't give you Aloha. We don't give you any care or concern or help. And I think we have that in Hawaii. It's remarkable here in Hawaii where everybody's supposed to be friendly in Aloha. We have lost that. I agree with you. I've had similar experiences with the tax office and many other state and county agencies. They are, they treat you as an adversary, not a client, not a member of the public. Not a client. Speaking of the tax office, let me share with you an interesting statistic. The tax office does keep some records on how much of the time it picks up customer service calls. Okay, back in 2015, it was at 50%. So you would call in to their automated system. You'd be put on hold. And back in 2015, there was a 50% chance you wouldn't be answered at all, irrespective of how long you were put on hold. Okay, so because they didn't keep apparently statistics of how long people were on hold or if they did keep them, they didn't share them with the public. Well, that assumes you even have a telephone number. You can go on a number of state agency websites and look in every corner of that website and never find a telephone number. And not only that, but you get a junk email which goes down into nowhere. So they don't wanna talk to you. And this is a leadership question. The governor ought to be pounding on this, but the governors have not been pounding on this. If they were gonna have an efficient automated system, okay, at least a little better, but that A, they don't have an automated system that's worth anything. And B, you can't find a number. And C, if you find a number, you wait for hours. What happened to us? What happened to us? What happened to us, Tom? We stopped caring, I think at some point and we need to go back to that. The department of tax kind of doubled back a little bit in terms of answering phone calls. In fiscal 2020, their call answer rate crept up to 82%, which is still not the best, but it's way better than 50. At the same time, though, published guidance that by the department remained scarce and I've complained about that before in my public writings. So it's still difficult for taxpayers to search for information to resolve the problems that they've got. Now, no article on the time tax at Hawaii would be complete without mention of the obscene length of time that native Hawaiian beneficiaries remain on the wait list for an award of Hawaiian homestead land. Some have been on the wait list for decades. Some have died on the wait list. Lots of them have died in the wait list. It took a 2020 Supreme Court decision to, I think, finally make them wake up because they are going to face some very serious consequences if they don't clean up their act. Well, so you have it on the business side. I mean, I think each side affects the other. If the government doesn't respond to you, then you find that businesses don't care either. And for that matter, if business don't respond to you, then the government doesn't care. We have a culture crossing the line. And it's a matter of money. If I have a 50% return versus an 80% return, I'm saving money. I'm saving a lot of money. I don't have staff. I don't have to pay anybody. I don't have to train anybody. I don't have to put in the infrastructure to respond to you. And no one really knows how much money I've saved, but just to a proportion, I've saved 30%, 40%, maybe 45% that way if I go down from 80% to 50%. Actually, I don't know why it can't be 100%. If you're in business and you're trying to hustle in the competition, you're at 100%. That's where you should be. You're not interested in saving money. You're interested in building brand and having people like you. So it is remarkable that we have declined in this way. But let me say that. Well, they're doing a cost-benefit analysis to see if that's what they really want to do. The problem with government is that there is no competition. If you want to go to the state and get benefits out of a state program, you go to this designated state agency and there is no competition with that agency. Well, the other thing is that you go ahead. Yeah, and so that kind of feeds on the problem. But then when you kind of think about it, the problem is like a regressive tax. The issue falls most heavily on the poor, the less educated, the ethnic minorities, the people who would be more likely to call in, the people who are more likely to need help with these complicated forms, instructions, and so forth that are necessary to qualify for and apply for any benefit program that the government has to offer. And you're also right in that people face, once that's overcome, there is an us versus them mentality at the agencies. The agencies want to weed out the fraudsters and the fakes and the liars and those otherwise unworthy. And there is stuff like racial stereotyping, whether they understand it or not. That, I think, is what happens. And that leads to the regressive regressivity. It leads to more discrimination. It makes the social ills worse than they were before. Only if there is, I think, a very strong focus on what the problem is, the extent of the problem, and how you can fix it, are you going to be able to come up with a government program that is not regressive, that is fair, that benefits the people who the legislature intended to benefit? Well, it's a matter of having public confidence in government. If I'm out of work and I want unemployment insurance, what have you. And the state of Hawaii just got a tranche of money from the federal government to do that. Can't they put some of that money into responding to me and having more people man the phones or hiring a contractor who will be more successful in responding to me on the phone? I find it extraordinary that they don't do that. So what you have is all this money, but it's not being distributed equally or fairly or equitably among people who really need it. It seems like the greater the need for these social benefits, the less the government cares about it because they are not likely to complain. OK, either he waits for three hours or he stops waiting and says, to hell with this, I'll find another way. Maybe I will be. Or that person gives up. There's a quote attributed to Governor Ron DeSantis of Florida. And so he was speaking about his states unemployment system, which is not that different from ours. And he said, having studied how it was internally constructed, it was, let's put as many kind of pointless roadblocks along the way so people just say, oh, to hell with that, I'm not going to do that. It was definitely done in a way to lead to the least number of claims being paid out. That's what he said. You believe him? I believe him. I believe him. I believe it's not only him, too. You just make it so hard that they give up. And of course, when they give up, something happens. And it is, imagine, imagine somebody who has been led to believe that he or she is entitled to benefits, led to believe the government is here to help. But the government doesn't help. You can't even talk to the government and you don't get your benefits. You give up. How then, this is rhetorical, how then, Tom, do you feel about the government? Do you have confidence in the government? No. And I think every time a call is not answered, every time a benefit that somebody has been led to believe he or she is going to get disappears and is unavailable and is behind a bureaucratic run, the Santos screen, that person or people lose confidence in the government. After a while, you find the social mesh is deteriorating. People don't like the government. They don't feel it's part of them or there to help them. And this is not good for our democracy. The government has to respond. It's the first order of priority. What's more, I think, is to mention that this bureaucracy is just, as the Santos said, intended to screen you out by putting roadblocks in your way. It is a far better thing, don't you agree, to make it simple. Like what I remember, the tax return form in Hong Kong in a better day was like one page long. And it was very simple. It was an easy calculation. Anybody could do it. That's not the case in the United States. So you put these screens out there and you don't have to. You can just make it simple, really simple, and then catch them on the other end. If you find that somebody needs it. One thing that has been tried in the insurance industry is that there are government mandated requirements for what we call the flesh ease of reading score, then there is such a measure. And then the government says that if your insurance policy is going to be acceptable, it's got to have a flesh-reading ease score under a certain amount so people can read it. Why can't they have the same test applied to government forms and instructions? That I think would be almost a no-brainer. It would take some work initially because the existing forms would have to be redone so people can read them. But I think this is not beyond the powers of our agencies. They've got smart people in there who've known the system for a long time. And they can explain how it works. It grows like topsy. I mean, it's just a good example would be a commercial lease in the city of Honolulu. Back in the day when you and I started practicing, we saw commercial leases that were five pages, eight pages long. Now they're 50, 60 pages long in tiny little eight point font. That's not the way it should be. You should be able to understand it, not get ambushed by it. But here's the thing. If you made it simple at the front end, if you made it easy to get the benefit, then people would care about government again. The social compact between citizen and government would be hopefully restored. And if they fraud the government, if they cheat, if they lie, you catch them at the other end. And when you catch them at the other end, you actually prosecute them. And you make it a front page story. And you look for high profile. Just the way the Internal Revenue Service sometimes doesn't. So to get the message out there, look, we're on an honor system, boys. If you violate the honor system, you will pay another price at the far end. Yeah, that reminds me. Let me tell you of a story that your comment just brings to mind. When I was in the tax office, I worked under two directors, the second of whom was Ray Kamikawa. And he's still around. He's practicing law today. But one of the first things that he did when he took office was he decided to make an example of somebody who wasn't following the rules. So he picked a service station. And I don't know if you remember this, but he picked a service station, the proprietor of which hadn't been filing tax returns for a very long time. And he had the cops converge on him. They shook him down. They opened up the register and they grabbed what was the register. And that made all of the six o'clock news and all of the TV stations. And there are laws that say the Department of Taxation can get the cops to help him or her. And that's what he used. Now, that spectacle has never been repeated since. Since- I thought he was a good tax director. Ray Kamikawa. He made an impression. He had a commitment to issuing prompt and timely guidance. And he was, I think, focused on helping taxpayers understand what their obligations were. And I think more, more, more, go ahead. It leads to compliance. That's what we, you know, this is supposed to be a voluntary compliance model, all of it, national and state, but it is not. Because, you know, under, you know, recent interpretations and characterizations and culture points in tax offices, they, you know, they make it hard for you. And when you do violate it or ignore it, they don't do anything about it. And- Oh, no, they do. Sometimes a lot more harshly than one would expect. Touche on that, that's true. But, you know, they, but just make it hard for you. And then they're not understanding, they're not tolerant, they don't appreciate the issues around a businessman's challenges, a woman's challenges, or for that matter, somebody who is in distress, like during COVID unemployed. And so it's really an attitudinal thing about treating the citizen as an equal, if you will, giving the citizen respect, trying to understand the citizen's problems and concerns and repairing the knitted sleeve of the social compact. You can quote me on that, Tom. So what we need to do is really change that culture, both nationally and state. Yeah, we the taxpayers are not just pigs clamoring around the feeding trough. A lot of times the agencies tend to treat us as such. But they ought to have more respect than that, is my opinion. So when you say the time tax, we're not only talking about the bureaucracy and essentially, as DeSantis said, putting barriers in the way of people who should be entitled to benefits from getting those benefits. We're talking about the time that people spend trying to figure it out. Which is perhaps the most pernicious barrier of all, because they try and, go ahead. Yeah, and I think one of the reasons why it is that way is, and you had mentioned earlier about a commercial lease. Commercial leases, for a long time, were built upon blocks that people wanted, or lawyers wanted to be there because they were tested in court, okay? But the fact that you had to go to court to figure out what this provision meant, means it was probably inunderstandable in the first place. So it was only later in the evolution of real estate and transactional law did people start finally getting away from that model and say, well, look, maybe we better draft these leases and such in a way that people actually understand them. And I think a lot of the programs, the forms, instructions, and so forth, kind of were built on the same model. Oh, let's do this to avoid litigation. Let's do this and word it this way because that language was tested in court. And I say to you, if the language was tested in court, I mean, that's fine, but it probably means something was wrong with it in the first place. If good people with right-minded people were arguing about the meaning of it, there must be something wrong with the language. Well, I remember a thing called the plain language law. It was a law. It was a statute, as I recall, that required certain documents to be written in plain language. That's a long time ago and I haven't heard much about it since. Have you? No, I haven't. I think it's in place in the federal arena. I don't think we have anything like that here, but I could be wrong. No, it was here. It was a Hawaii statute, but I think it somehow went away. But back to your comment about going to court. So this mom and pop organization took a lease, whether they read it or didn't read it, it was 50 or 60 pages long. And the landlord comes down to them about some provision on page 42 in 8.5. And they don't agree. They don't think that that's good language. They don't think it means what the landlord says it means. Or more aptly, the landlord's attorney says it means. So how do you get from there to court? Can mom and pop afford a legal test of this language? Can mom and pop afford to hire a lawyer about this language and have him research the cases of her and have him go to court and argue for a judge or oh my gosh, even possibly a jury about this language? You know what, the benchmark is that's $100,000 right there. Mom and pop will never do that. So you can see how inequitable it is to have a long lease with carefully crafted language, which is onerous on the guy who could never, as a matter of marketplace power, could never have the power to argue with it. This very problematic. And it exists in the area of government just as well. If not more, the government has unlimited resources to fight with you. And the government has leases too. And it has documents and regulations that have the power of law. And what are you gonna do about it? You gonna take them to court? You're gonna go to Supreme Court mom and pop? Think so? So I think it's an attitudinal thing that is visiting the fabric of our relationship with government and somebody should be making this a platform point, don't you think? Oh, absolutely. You know, we definitely need agencies to, you know, when they're executing the laws to educate the public clearly and thoroughly on what's required. We need responsive agencies as we talked about before. We, the taxpayers are not, you know, pigs at the trough. We deserve to be respected. Even if we're wrong and there's a good chance we are because the law is so complicated and those guys deal with it all the time. So all of this kind of leads to, you know, there needs to be a, you know, a fuller awareness of this type of problem, you know, among lawmakers, among the agencies, that there is this time tax that it is causing a burden on the electorate. And that, you know, we gotta do something about this. Once that happens, hopefully then maybe they can make the system better. Don't hold your breath. But you know, one policy point I wanna raise with you to see what you think about it in terms of the cost-benefit analysis is in business, you know, that there's a certain amount of shoplifting. You know that. They're gonna get all excited about it. It's manageable, usually. And it's not worth chasing people down. The risks and difficulties and costs of chasing them down, it ain't worth it. So the same thing with government. If I know that people are slipping through my screen, my filter as it were, and they're taking benefits maybe they shouldn't be entitled to. You know, I could make the business decision, the cultural decision, you'll all have decision and say, okay, all right, I'm not gonna get excited. I know that a certain percentage of people are gonna cheat. It's okay, because I don't want to punish a million people for the transgressions of a very small number. So on a cost-benefit analysis, I'm gonna let it go. What do you think of that? Well, I think that's fine if you do have an enforcement policy and if you do catch people and you beat the crap out of them, when you do catch them, on the cases that you do choose to prosecute, make them a public spectacle, because the public needs to know that you the agency have teeth and you're using them. Yeah, you can not sweat the small stuff, that's fine. But come up with one or two that you feel significant about and then throw the book at them. Well, it's interesting you mentioned that because you said, if you choose to pursue them, if you choose to pursue them, there's a choice there. It's not mechanical, and if it's a mom and pop who've worked all their lives, who have been kind to their employees, whatever it may be, a situation that begs for equity, those people should be. And it's a human decision. It's a decision of a conglomerate bureaucrat. You give them the benefit of the doubt, you leave them alone and you go for the ones that have meaning on the front page. But a good number of people, you can afford to leave them alone because you know what? Although you're not terrifying anyone who's a mom and pop by leaving them alone, you're sending another kind of message and the message is we care about you. We have heart, we have a law. We will forgive you, negotiate with you, give you a break. And that has to be in the mixture too, don't you think? Oh, of course, yeah. Yeah, you can't get away from humanity. No, but we have, we have. We have gotten away from humanity. What we do is we put a 40 foot concrete wall between us and the taxpayer or the person seeking benefits. And that's not humanity, that's something else. Okay, Tom, this has to be big point on the agenda. And we have to see if somebody running for office will take up the mantle on trying to fix this. It's a problem, which is what I say not anytime soon is that it's not a high political priority. Don't you agree? It's not likely to be very interesting in a political campaign. Oh, I disagree. I mean, if somebody says, under my watch, I will go after this agency and that agency, I'll reduce the time it gets, you need to get a driver's license renewal from two hours to 30 minutes. That I think you might resonate with people. You think this could be the subject of a state audit? It has been. It has been several times. I mean, the DHHL was, I think, the woes of the unemployment agency were very thoroughly fleshed out either by the agency itself or by an audit. I forget which, but, and they were to their credit trying to do all kinds of stuff to help people, but they ran into roadblocks like, oh, geez, we're on this mainframe that's a million years old. And if we try to push it a little too much, it'll fall apart on us. Yeah, and that's one last point we should talk about. You know, when Neil Abercrombie was governor and he brought in Sonny Bagualia to be his special computer guru for the state computers, there was this revelation that the state was behind by decades and that its system didn't work. And Sonny Bagualia spent, well, millions finding that out and then he left. And I don't think we ever really fixed it. I don't think we ever threw the money at it that has to be applied in order to make a state computer system work better. And not only is it not working well, it's not uniform either. I suggest to you, and I like your thoughts on this, that if we had a better state computer system, if we had a computer system that was dedicated to public service and keeping data and communications in a way that serves the highest public standard, we'd be better off and we would be more responsive. Don't you think? Well, there's really no way to argue against that. I do think the state has made some incremental steps toward getting there, but kind of getting to the end stage of that is tough because it's gonna require a lot of money, some of which we as taxpayers, due to our less than optimal confidence in government don't really wanna pay them. So it is kind of part of a vicious circle. But what we should be doing is we should be increasing the transparency. We should be making incremental steps to get like a uniform account system, a uniform call queue system or whatever you call it that actually is fair and can be perceived by the public as such. It's an ongoing thing though. It's an ongoing battle. It's not a question of fixing it today and then letting it go for 20 years again. It's a matter of always keeping your eye on it, always serving the public. Well, thank you, Tom. Tom Yamachika, president of the Tax Foundation of Hawaii, it's so nice to talk to you, appreciate your coming down. See you in a couple of weeks for more. Aloha. Aloha.