STAND. COM. REP. NO. 2392

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 2219

       S.D. 1

 

 

 

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

 

Sir:

 

     Your Committees on Judiciary and Labor and Commerce, Consumer Protection, and Health, to which was referred S.B. No. 2219 entitled:

 

"A BILL FOR AN ACT RELATING TO TAXATION,"

 

beg leave to report as follows:

 

     The purpose and intent of this measure is to provide a taxpayer who hires an individual with a disability with a nonrefundable tax credit for fifty percent of the wages of the individual earned during the six-month period after the individual is initially hired by the taxpayer.

 

     Your Committees received testimony in support of this measure from the State Council on Developmental Disabilities, Hawaii Restaurant Association, and one individual.  Your Committees received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

 

     Your Committees find that employment of a person who is disabled provides the individual with economic self-sufficiency and allows the person to contribute to the community.  Implementation of this measure will increase the employment opportunities for persons who are disabled and support the workforce demands of the private and public sectors.

 

     Your Committees have amended this measure by:

 

     (1)  Clarifying that for wages paid by an employer to a person whose certification as a person totally disabled is incorrect because it was based on false information provided by the person, the employer shall not treat those wages as qualified wages even without receiving notice that the certification has been revoked;

 

     (2)  Inserting language to prohibit a tax deduction for the portion of wages or salaries paid or incurred for the taxable year that is equal to the amount of this proposed tax credit;

 

     (3)  Replacing "individual with a disability" with "person totally disabled", as defined in section 235-1, Hawaii Revised Statutes;

 

     (4)  Inserting an effective date of January 7, 2059, to encourage further discussion; and

 

     (5)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

 

     Your Committees have heard the testimony of the Department of Taxation expressing concerns that the income tax credit proposed by this measure is similar to an existing credit in section 235‑55.91, Hawaii Revised Statutes, and that the measure does not address whether the tax credit can be claimed by succeeding employers of the person who is disabled or by subsidiaries of the original employer.  Your Committees find these issues raise concerns that merit further consideration and request that your Committee on Ways and Means further examine the issues and concerns raised by the Department of Taxation.

 

     As affirmed by the records of votes of the members of your Committees on Judiciary and Labor and Commerce, Consumer Protection, and Health that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2219, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2219, S.D. 1, and be referred to your Committee on Ways and Means.

 


Respectfully submitted on behalf of the members of the Committees on Judiciary and Labor and Commerce, Consumer Protection, and Health,

 

________________________________

ROSALYN H. BAKER, Chair

 

________________________________

GILBERT S.C. KEITH-AGARAN, Chair