We got into a discussion about the high taxation in Hawaii and I thought it would be worthwhile to dive into the fundamentals of why taxes are high in Hawaii and why they will most likely be going higher, especially for visitors. Let me know what you think!
Do you have a question for me that you would like answered on YouTube? Let me know in this form below.
Transcript
we got a good one for you today
why are taxes high in hawaii
now you know hawaii has some of the
highest taxes in the country uh our
income tax is 11
if you’re a visitor
you’re going to pay a 13 tax
on hotel combinations not to mention uh
rental car taxes and all that kind of
stuff
uh we have a uh instead of a sales tax
in hawaii we have what’s called an
excise tax and it looks like a sales tax
so you come here and you say oh wow
hawaii only has a four percent sales tax
wrong
it’s a four percent excise tax excise
that means that everything is taxed at
four percent everything everyone pays a
tax on four percent on everything they
buy so what this ends up being it’s a
tax on attacks on attacks
some people some economists feel that uh
this actually accounts for a 10
uh increase
on the cost of everything in hawaii so
why is that
why does hawaii have the highest
probably the highest taxes in the
country if if not the highest
tax in the country if you’re considering
a move here
what does it tell you about our culture
so i’ve come up with four key reasons
why we have such high taxes in hawaii
and the fourth one is going to blow your
mind
let’s get on in on this
[Music]
aloha
i’m peter k
and i am living the dream in hawaii look
what a beautiful place this is been here
since the 80s and i connect with people
that want to live in hawaii
so if that’s you this is your channel
you want to click and subscribe and
click on the notification
we get a video every couple weeks so why
are taxes so high in hawaii
well the first one’s an easy one
number one
we’d rather tax you
sorry it’s the way it is
see everybody is okay
with someone else paying taxes
it’s when you got to pay them that we
have a that you have a problem right but
if i get someone else to pay tax i’m all
for it so this is really just a simple
thing of human nature
i’d rather have someone else pay
your visitor i live here
if i have a choice between me paying the
tax or you pay the tax i’m gonna have
you pay it and that’s why we have a 13
tax nowadays
on the hotel bill
and chances are this is just the
beginning there’s talk about
additional fees
uh no matter what you do parks hikes et
cetera a lot of stuff that used to be
free
ain’t gonna be free no more because we’d
rather tax you than us reason number two
people in hawaii
don’t really want
the visitor industry that they used to
have
they want less people
and the way to get less people
is to charge more you know kovid really
changed things over here
and people in hawaii are now
not really sure
that they want to have the kind of
visitor industry that they used to have
we’re not really sure that we want to
have tourists all over the place in fact
people probably don’t and so
that means we’re going to bump up the
prices we’re going to bump up the prices
because we’d rather charge more and have
less people come here than keep it cheap
and have a lot of people show up
that’s an important trend that’s
developing i mean you know during kovid
man we had there was the peaches were
empty there was no traffic
you know there was no crowds it was
awesome
and now we’re like man do we want to go
back to there do we want to go back to
those crowds all over again
now let’s charge them more now there was
a couple things very interesting things
that happened during covid
uh
that indicated to us
that hawaii was way underpriced
underpriced now how do we know that
well here’s an example
rental cars
there was a shortage of rental cars and
some and rental cars were were going for
300
a day now this is like a 50 a day car in
the old days now i was going for 300 and
people were paying for it so what does
that tell you
he’s by definition we’re way underpriced
the genie is out of the bottle now
people know we know that people will pay
more
and if we know they’re going to pay more
we’re going to charge more
you know this sounds kind of cruel right
i mean you know but this is
this is called the laws of economics
right this is the way it is people are
willing to pay more
and hawaii has been under charging so
get ready prices are going up they
happen and they will continue to i mean
you know dylan said it so in one sense
you know hawaii’s been
really undercharging
and what would anybody do if they
thought that they were under charging
you know what would you do
if you thought that you were getting
paid way less than you could be paid
you’d ask for a higher price
human nature
sorry hey are you subscribed to my
newsletter
i sent out a newsletter a free
newsletter of course that you can
unsubscribe to of course anytime you
want it comes out every week and it’s
filled with new videos and also an
invitation to we have a live show every
other friday where we talk about things
like this and things about hawaii so if
you want to get that free invite to that
live show where you can attend
in the description of this video i’ve
got a link click on the link it’ll take
it to the subscribe page just give me
your email address of course you can
subscribe anytime but you want to get
that weekly newsletter all right number
three
there are no political consequences of
tax increases in hawaii the sad truth is
that we in hawaii
keep reelecting people who keep raising
our taxes dylan shared this line from
benjamin franklin so if you think about
it
because
there’s no political consequences
for raising taxes
and making this place more expensive
it kind of works out to be this perverse
incentive
to keep doing it right because think
about it you’re running for office and
you could promise all this stuff that
you’re going to give to people
which you know is going to require tax
increases but you also know that doing
that is not going to hurt your election
so why not so by this bizarre thing of
us reelecting people that keep raising
our taxes we’re incentivizing them to do
more and that’s number three why our
taxes are so high yeah beautiful view i
love this view of the valley i’m in
manoa valley right now it’s one of the
most beautiful places on oahu manoa
valley gets a rainbow
every day i had an office here once and
every day we had rainbows it was
unbelievable there’s actually a hawaiian
legend story about rainbows in manoa
valley you should go look that up you
might like it i love the mountains over
here you’re cruising right next to it
it’s such a beautiful place and it’s
always so green it rains here often
because it’s it’s a deep in the valley
so it catches morning rains it’s a
beautiful place
aloha manoa valley aloha manoa valley
reason number four
the one you’ve been waiting for the mind
blower on why we have high taxes in
hawaii are you ready
the reason why
we have high taxes in hawaii is because
we
the people of hawaii
don’t care
yep
we don’t care that’s the mind blower
right
taxes are high this place is super
expensive
because we don’t care we’ll pay the
price
we love living in hawaii so much we
don’t care what the price tag is we’ll
pay it
just like you visitors who will come
here and pay the 300 a day rental on the
car and are paying the 13 tax on the
hotel and are going to pay higher fees
to get into the parks you’re paying it
because it’s worth it we don’t care that
we have some of the highest priced
housing in the country we don’t care
that our groceries
are some of the highest cost groceries
in the country don’t care we don’t care
that we have some of the most expensive
real estate in the country we don’t care
because we’ve chosen to live here for
this amazing place
and we pay for it
it’s actually there was a term that was
brought up a long time ago is called the
price of paradise
and it’s the price of paradise
and we pay it and we don’t care and you
know here’s some a bit of evidence
we have the lowest
if not the lowest voter turnout rate
certainly one of the lowest voter
turnout rates in the country what does
that tell you
we don’t care
now the sad part
and this is tragic
the sad part
is that
of course
not everyone can afford to live here
and what’s worse
is that a lot of families that have
lived here for generations
now can no longer afford to live here
that is why
sadly
hawaii has one of the highest
exodus or out migration rates in the
country i believe as of this video 2022
uh we are number three just behind
illinois and new york hawaii is number
three
in terms of people leaving the state we
actually have a
10 000 more people leave hawaii than
come to hawaii every year
which is why i put together this whole
online community
to help you avoid that again link in the
description click on get on the
newsletter
so that folks is number four
the mind blower
the reason why taxes are high is because
we don’t care all right you got a
question for me
click on the link in the description
there’s a form there for questions
submit your question make sure you leave
me your name and where you’re from so i
can give you credit
and we’ll see you next time i am peter k
and i am living
in probably the most expensive place in
the world with the highest taxes in the
world with the lowest voter
participation in the world and i don’t
care
because i love this place
and that’s the way it is
aloha
I got a good dose of “aloha” in ’67&’68 while stationed there. Even then I thought it was crowded[Oahu]. I agree with tax the tourists/visitors, after all it is paradise and well worth the money to visit. Hope Hawaii doesn’t kill the tourist business, it needs it. I learned to surf there on the south shore but did make it to Waimea and Pipeline. If it weren’t so pricey and I could still surf I would return. For now I have great memories and a magical two years in paradise. Aloha.
You’re so lucky that you had 2 years! Most get 2 weeks if anything at all.
This was a great video as usual. Japan has an issue with people not caring and always voting in, if they vote which is not many people, the same LDP politicians/people year after year come back as dynasty’s. Consumption tax is 10% across the board which I think is absurd because food, medical care, prescriptions, and child care should not be taxed in my opinion. My Japanese friends all agree but lift their shoulders and do not fight it, saying Shoganai, which means cannot be helped. Food is taxed 8% if you take it home, but if you consume it on a premise like a 7-11 etc. you pay 10%.
Health insurance is based on income which is great and a wonderful health system. Not sure if it is taxed though as costs are regulated and set by the government. Drug store over the counter drugs are taxed 10%. It is actually cheaper to go to a doctor here to get meds than to go buy over the counter.
Food here is fabulous and if you buy seasonal, you will find great health benefits and stay trim more or less. WE pay much less for alcohol like beer etc. than I can ever get in Hawaii when visiting family, and the best part of that is that you can freely drink in public anywhere. No issues at all with the police. No brown bagging like in my old days back in NYC. You can drink in cars as well but the driver cannot. I do not drive anymore as no need to with the amazing public transport, but when I did there were lots of random drinking and driving checks.
There are some heavy taxes though if you drive. Road taxes, highway toll booths crazy, and gas right now is at ¥170 a liter on average. A liter is about a quart. About $7 a gallon depending on the exchange rate. Your COSTCO gas in Hawaii is dirt cheap.
Anyway, if you love a place, you deal with it. I am not a winter lover, but pretty mild actually, and the other three seasons superb in my area. Spring is coming. Love Japan, and love visiting family in Hawaii.
Aloha!
Tom
As you already know, much of Hawaii’s values come from Japanese culture, and I believe a big part of that is the unwillingness to change leaders
The Tax Foundation disagrees with you. It lists the following as the highest combined tax states.
New York 12.7%
Connecticut 12.6%
New Jersey 12.2%
Illinois 11.0%
California and Wisconsin 11.0%
And the following as the highest sales tax states
Tennessee 9.55%
Louisiana 9.52%
Arkansas 9.51%
Washington 9.23%
Alabama 9.22%
Hawaii is not even the highest income tax state.
California 13.3%
Hawaii 11%
New Jersey 10.75%
Oregon 9.9%
I said “one of the highest, if not the highest”. And as you know, our GET is not a sales tax. Regardless, this wasn’t a video comparing Hawaii to the other states – that was only a passing comment. This video explains the “why”. I’d be interested in your feedback on those aspects.
I also agree with Mr Lawler and would add the method reported is in some cases deceptive. For example, if you make 2 million per person in Cali, then the rate is 13%. If you make 100k, its 4.5. The problem with all this analysis is that its based on the plan, not the effects of what most people pay. Also in CA property tax is limited to 1.03% of purchase value with a limit of 5% increases capped on that amount and seniors can transfer their existing rate on new purchases. This means that i had a 700k home that i paid 5k anually for property tax versus Ohio where i would have a home at half the vale and pay 2.5 times as much in protax alone! I think since most pay mortgages that include taxes, people tend to be ambivalent as to how much they are spending on the bulk of local and state tax revenue and tend to focus on things like sales tax, GET etc. i admit that we never paid attention until we paid off my home 10 years ago. Then what a shock! Check out rates in Ohio, Tenn, Florida, New York for example and you will be flabbergasted. As stated its all about perception. Understand too, i am just saying and agreeing that taxes are HIGH. That everything costs money, especially infrastructure and healthcare. I just think there is a lot of distraction based on how much not what we are spending on. So I appreciate this discussion My two cents.
Thanks Dave for adding to this. Your message for some reason went to the Trash and I just discovered and recovered it today.
You didn’t even mention that the TAT tourist tax on Maui is now 17.25% when added to the GET. Probably because you’re Oahu based.
Thanks for adding that. Each county is now setting up their own tax rates.
So, as you may know, Peter, one of the issues regarding the TAT, as first designed in 1986, was that it was supposed to move the tax burden off of the people and onto the tourists. After all, they come, they pay, they leave, and we get the benefit of it. This was also true with the GET surcharge for rail, having been sold by Hannemann et.al. that 60% of the burden on the surcharge comes from the tourists, so the residents don’t get hit by it as much.
Needless to say, this is dynamite on paper and that is one reason why tourism went from somewhere in the 6-7 million level after 2001 to north of 10 million a mere 18 years later. As long as the tourists came, spent, and left their money here, we were all good as gold.
Then COVID hit, and the one industry that would be hit hardest by it, that wouldn’t easily recover from it because of our leadership, was tourism. Even the unions told the government that it better get that engine restarted lest the government chose to impose furloughs and other budget-cutting measures because the industry was kneecapped by crushing COVID-based regulations. Once the Governor implemented Safe Travels – boom goes the dynamite – money flowed back in like honey, and everyone was once again happy. So anyone saying that we need to increase taxes on the people might want to take a good look at what we were supposed to be doing to alleviate the pressure on residents.
Unless of course, that model does not work anymore – I’d argue that with COVID – and figure out how to get new revenues to come in that are not based on the feckless nature of hospitality.
Well said, Stan, as usual! Like I said in the video, the Genie is out of the bottle. It’s now clear that Hawaii has been underpriced, and our new TAT structure will allow the counties to work on capturing that unrealized value. I’d rather have it go to the industry and result in higher wages, but that’s another story altogether.
This is nonsense. You need a reality check. Move to Cleveland Ohio. Get ajob and buy a 300k house. Pay 12000 yuear/1000 month for property tax, income tax at your residence, income tax in every city where you are employed, state income tax, sales tax of 8%, Don’t forget all the excise taxes on energy and the taxes on retirement income including social securiy and pensions. Having lived in Ohio, Kentucky, Florida, Arkansas and California I am grateful to be here for many reasons and relative low taxes are a part of that. You points about tourism are well taken and obviously this is a evolving environment. I realize that this is a sensitive subject but it is so poorly reported and perception falls on that.
Where, exactly, am I wrong?
First apologies your observations are not nonsense, a bad choice of words on my part. Let me temper this; you are not “wrong”. Like i said its perception. Taxes high for Hawaii and going up -yes. Overall costs relative to taxes vs most of the mainland, still a huge bargain. This is the perspective of a retired person, however my example of Ohio taxes should illustrate that Hawaii is not out of line per se and you get what you pay for.
https://www.google.com/amp/s/www.kiplinger.com/retirement/601814/most-tax-friendly-states-for-retirees%3famp
No argument there. After all, I’ve been living here for nearly 40 years. Glad you’re enjoying your retirement.
What about the Jones Act and it’s effect on prices in the islands???
That’s a whole other topic that contributes to high prices for sure