Bill Text: HI HB1092 | 2012 | Regular Session | Amended
Bill Title: Taxation; Tax Improvement
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Enrolled - Dead) 2012-04-13 - (H) Received notice of all Senate conferees being discharged (Sen. Com. No. 747). [HB1092 Detail]
Download: Hawaii-2012-HB1092-Amended.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
1092 |
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TWENTY-SIXTH LEGISLATURE, 2011 |
H.D. 1 |
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STATE OF HAWAII |
Proposed A |
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A BILL FOR AN ACT
RELATING TO TAXATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The purpose of this Act is to amend Hawaii tax law to institute improvements and equity amongst taxpayers.
More specifically, this Act:
(1) Provides for the taxation of the pension income of:
(A) An individual filer with federal adjusted gross income of $100,000 or more;
(B) A joint filer with federal adjusted gross income of $200,000 or more; and
(C) A head of household or surviving spouse with federal adjusted gross income of $150,000 or more;
(2) Repeals the deduction for state taxes paid, with a phaseout for taxpayers with lower incomes; and
(3) Modifies the exclusion for royalties.
PART I. TAXATION OF PENSION INCOME
SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§235- Taxation of pension income. For taxable years beginning after December 31, 2010, sections 88-91, 235-7(a)(2), and 235-7(a)(3) shall apply only to taxpayers with federal adjusted gross income of:
(1) Less than $100,000 for a taxpayer filing a single return or a married person filing separately;
(2) Less than $150,000 for a taxpayer filing as a head of household or surviving spouse; or
(3) Less than $200,000 for a taxpayer filing a joint return."
SECTION 3. Section 88-91, Hawaii Revised Statutes, is amended to read as follows:
"§88-91 Exemption from taxation and execution. The right of a person to a pension, an annuity or a retirement allowance, to the return of contributions, the pension, annuity or retirement allowance itself, any optional benefit or death benefit, any other right accrued or accruing to any person under this part and the moneys in the various funds created under this part are exempted from any tax of the State, subject to the limitations contained in section 235- ; and, except as in section 88-92 provided, shall not be subject to execution, garnishment or any other process and shall be unassignable except as in this part specifically provided."
SECTION 4. Section 235-7, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) There shall be excluded from gross income, adjusted gross income, and taxable income:
(1) Income not subject to taxation by the State under the Constitution and laws of the United States;
(2) Rights, benefits, and other income exempted from
taxation by section 88-91, having to do with the state retirement system, and
the rights, benefits, and other income, comparable to the rights, benefits, and
other income exempted by section 88-91, under any other public retirement system[;],
subject to the limitations contained in section 235- ;
(3) Any compensation received in the form of a
pension for past services[;], subject to the limitations contained in
section 235- ;
(4) Compensation paid to a patient affected with Hansen's disease employed by the State or the United States in any hospital, settlement, or place for the treatment of Hansen's disease;
(5) Except as otherwise expressly provided, payments made by the United States or this State, under an act of Congress or a law of this State, which by express provision or administrative regulation or interpretation are exempt from both the normal and surtaxes of the United States, even though not so exempted by the Internal Revenue Code itself;
(6) Any income expressly exempted or excluded from the measure of the tax imposed by this chapter by any other law of the State, it being the intent of this chapter not to repeal or supersede any express exemption or exclusion;
(7) Income received by each member of the reserve components of the Army, Navy, Air Force, Marine Corps, or Coast Guard of the United States of America, and the Hawaii national guard as compensation for performance of duty, equivalent to pay received for forty-eight drills (equivalent of twelve weekends) and fifteen days of annual duty, at an:
(A) E-1 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2004;
(B) E-2 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2005;
(C) E-3 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2006;
(D) E-4 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2007; and
(E) E-5 pay grade after eight years of service; provided that this subparagraph shall apply to taxable years beginning after December 31, 2008;
(8) Income derived from the operation of ships or aircraft if the income is exempt under the Internal Revenue Code pursuant to the provisions of an income tax treaty or agreement entered into by and between the United States and a foreign country; provided that the tax laws of the local governments of that country reciprocally exempt from the application of all of their net income taxes, the income derived from the operation of ships or aircraft that are documented or registered under the laws of the United States;
(9) The value of legal services provided by a prepaid legal service plan to a taxpayer, the taxpayer's spouse, and the taxpayer's dependents;
(10) Amounts paid, directly or indirectly, by a prepaid legal service plan to a taxpayer as payment or reimbursement for the provision of legal services to the taxpayer, the taxpayer's spouse, and the taxpayer's dependents;
(11) Contributions by an employer to a prepaid legal service plan for compensation (through insurance or otherwise) to the employer's employees for the costs of legal services incurred by the employer's employees, their spouses, and their dependents;
(12) Amounts received in the form of a monthly surcharge by a utility acting on behalf of an affected utility under section 269-16.3 shall not be gross income, adjusted gross income, or taxable income for the acting utility under this chapter. Any amounts retained by the acting utility for collection or other costs shall not be included in this exemption; and
(13) One hundred per cent of the gain realized by a fee simple owner from the sale of a leased fee interest in units within a condominium project, cooperative project, or planned unit development to the association of owners under chapter 514A or 514B, or the residential cooperative corporation of the leasehold units.
For purposes of this paragraph:
"Fee simple owner" shall have the same meaning as provided under section 516-1; provided that it shall include legal and equitable owners;
"Legal and equitable owner", and "leased fee interest" shall have the same meanings as provided under section 516-1; and
"Condominium project" and "cooperative project" shall have the same meanings as provided under section 514C-1."
PART II. STATE TAX DEDUCTION
SECTION 5. Section 235-2.4, Hawaii Revised Statutes, is amended by amending subsection (h) to read as follows:
"(h) Section 164 (with respect to taxes)
of the Internal Revenue Code shall be operative for the purposes of this
chapter, except that sections 164(a)(6) and 164(b)(6) shall not be operative
for the purposes of this chapter[.]; provided that amounts allowed as
a deduction under sections 164(a)(3) and 164(b)(5), shall be reduced as
follows:
(1) For a taxpayer filing a single return or a married person filing separately, the deduction shall be reduced in accordance with the following table:
If federal adjusted
gross income is: The reduction shall be:
Less than $75,000 50% for taxable years beginning
after December 31, 2010;
75% for taxable years beginning
after December 31, 2011;
100% for taxable years beginning
after December 31, 2012.
$75,000 and over 100% for taxable years beginning
after December 31, 2010.
(2) For a taxpayer filing as a head of household or surviving spouse, the deduction shall be reduced in accordance with the following table:
If federal adjusted
gross income is: The reduction shall be:
Less than $112,500 50% for taxable years beginning
after December 31, 2010;
75% for taxable years beginning
after December 31, 2011;
100% for taxable years beginning
after December 31, 2012.
$112,500 and over 100% for taxable years beginning
after December 31, 2010.
(3) For a taxpayer filing a joint return, the deduction shall be reduced in accordance with the following table:
If federal adjusted
gross income is: The reduction shall be:
Less than $150,000 50% for taxable years beginning
after December 31, 2010;
75% for taxable years beginning
after December 31, 2011;
100% for taxable years beginning
after December 31, 2012.
$150,000 and over 100% for taxable years beginning
after December 31, 2010."
PART III. ROYALTIES EXCLUSION
SECTION 6. Section 235-7.3, Hawaii Revised Statutes, is amended to read as follows:
"§235-7.3 Royalties derived from patents, copyrights, or trade secrets excluded from gross income. (a) In addition to the exclusions in section 235-7, there shall be excluded from gross income, adjusted gross income, and taxable income, amounts received by an individual or a qualified high technology business as royalties and other income derived from any patents, copyrights, and trade secrets:
(1) Owned by the individual or qualified high technology business; and
(2) Developed and arising out of a qualified high technology business.
[(b) With respect to performing arts
products, this exclusion shall extend to:
(1) The authors of performing arts
products, or any parts thereof, without regard to the application of the
work-for-hire doctrine under United States copyright law;
(2) The authors of performing arts
products, or any parts thereof, under the work-for-hire doctrine under United
States copyright law; and
(3) The assignors, licensors, and licensees
of any copyright rights in performing arts products, or any parts thereof.
(c)] (b) For the purposes of
this section:
"Performing arts products" means:
(1) Audio files, video files, audiovideo files, computer animation, and other entertainment products perceived by or through the operation of a computer; and
(2) Commercial television and film products for sale or license, and reuse or residual fee payments from these products.
"Qualified high technology business"
means a business that conducts more than fifty per cent of its activities in
qualified research[.] in Hawaii.
"Qualified research" means:
(1) The same as in section 41(d) of the Internal Revenue Code;
(2) The development and design of computer software for ultimate commercial sale, lease, license or to be otherwise marketed, for economic consideration. With respect to the software's development and design, the business shall have substantial control and retain substantial rights to the resulting intellectual property;
(3) Biotechnology;
(4) Performing arts products;
(5) Sensor and optic technologies;
(6) Ocean sciences;
(7) Astronomy; or
(8) Nonfossil fuel energy-related technology."
PART IV. MISCELLANEOUS PROVISIONS
SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 8. This Act shall take effect on approval, and shall apply to taxable years beginning after December 31, 2010; provided that the amendments made to section 235-7(a), Hawaii Revised Statutes, by this Act shall not be repealed when that section is reenacted on January 1, 2013, by section 3 of Act 166, Session Laws of Hawaii 2007.
Report Title:
Taxation; Tax Improvement
Description:
Makes various amendments to the tax laws: excluding pension income from income tax only for certain persons; eliminating the deduction for state income taxes paid; and eliminating the income tax exclusion for certain persons involved in copyrights. (HD1 Proposed #1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
