Income tax; capital gains
Reduces income tax on capital gains to .0001 per cent.

HB HMIA 99-253
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                     A BILL FOR AN ACT



 1      SECTION 1.  The purpose of this Act is to amend the income
 2 tax law to lower the tax rate for capital gains to .0001 per
 3 cent.
 4      SECTION 2.  Section 235-51, Hawaii Revised Statutes, is
 5 amended by amending subsection (f) to read as follows:
 6      "(f)  If a taxpayer has a net capital gain for any taxable
 7 year to which this subsection applies, then the tax imposed by
 8 this section shall not exceed the sum of:
 9      (1)  The tax computed at the rates and in the same manner as
10           if this subsection had not been enacted on the greater
11           of:
12           (A)  The taxable income reduced by the amount of net
13                capital gain, or
14           (B)  The amount of taxable income taxed at a rate below
15                [7.25] .0001 per cent, plus
16      (2)  A tax of [7.25] .0001 per cent of the amount of taxable
17           income in excess of the amount determined under
18           paragraph (1).
19      This subsection shall apply to individuals, estates, and

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 1 trusts for taxable years beginning after December 31, [1986.]
 2 1997."
 3      SECTION 3.  Section 235-71.5 is amended to read as follows:
 4      "[[]235-71.5[]]  Alternative tax for corporations.  Section
 5 1201 (with respect to alternative tax for corporations) of the
 6 Internal Revenue Code shall be operative for the purposes of this
 7 chapter and shall be applied as set forth in this section.  If
 8 for any taxable year a corporation, regulated investment company,
 9 or real estate investment trust has a net capital gain, then, in 
10 lieu of the tax imposed by section 235-71, there is hereby
11 imposed a tax (if such tax is less than the tax imposed under
12 section 235-71) which shall consist of the sum of:
13      (1)  A tax computed on the taxable income reduced by the
14           amount of the net capital gain, at the rates and in the
15           manner as if this section had not been enacted, plus
16      (2)  The sum of:
17           (A)  [3.08] 0.0 per cent of the lesser of:
18                (i)  The net capital gain determined by including
19                     only the gain or loss which is properly taken
20                     into account for the portion of the taxable
21                     year before April 1, 1987 (i.e., the amount
22                     in paragraph (1)), or
23               (ii)  The net capital gain for the taxable year,

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 1                     plus
 2           (B)  [4] 0.0 per cent of the excess (if any) of:
 3                (i)  The net capital gain for the taxable year,
 4                     over
 5               (ii)  The amount of the net capital gain taken into
 6                     account under subparagraph (A)."
 7      SECTION 4.  Statutory material to be repealed is bracketed.
 8 New statutory material is underscored.
 9      SECTION 5.  This Act, upon its approval, shall apply to
10 taxable years beginning after December 31, 1997.
13                         INTRODUCED BY:___________________________

HB HMIA 99-253