Hawaii's taxing experience

Hawaii has a gross-receipts type tax, called a "gross excise tax" or GET.

It is one of the reasons why there are so many Hawaiians on the mainland and why Hawaii has been a basket case for some time now.

It's the combination of the GET and leased land that has crippled businesses in Hawaii.

Of course, the Hawaiian economy was in serious trouble even when times were good.

The GET is a carpet sweeper tax that hides its true nature from the public.

In Hawaii, it started out low and is now over 4 percent.While that sounds low, it is not.

Since the tax is on every layer of business starting with transportation, communications, wholesaling, retailing, etc., the real economic impact of a 4 percent tax is over 20 percent.

Businesses simply cannot compete under that kind of a tax.

One result of the tax in Hawaii is that public employee unions ended up controlling the legislature.

That in turn meant that the legislature could not stop salaries and benefit increases, since the unions would always demand that the GET be increased to pay for fat salaries and extraordinary benefits.Worse, Hawaii's government grew out of control.

As of 2001, there were 20 pages of telephone listings for Hawaii state agencies in the Oahu telephone book, versus only two for Nevada.

The GET statute soon became riddled with narrowly written exceptions.

Businesses had to pay it themselves.

For such a business, that was like an anchor around its neck.

And if that business was struggling, the tax quickly became a major problem for the business's owners.

As the GET, government and leased land problems increased in Hawaii, the state lost its vibrancy.

Businesses closed down or moved to the mainland.

Business leaders and entrepreneurs left.

There was no incentive to take risks and create jobs.

The result has been a disaster for both those who stayed and those who left.

The worst thing about the tax is its stealth destruction of the economy with its apparent "low" number.

It simply provided too much temptation to bloat government.

I predict that if the GET is adopted in Nevada, it will not stay at a low rate for very long.

I also predict that government salaries and benefits will increase rapidly out of control (even more than now), government employees will accrue a huge amount of power to the point they will take over Nevada's government (even more than now), and that they will run the government into the ground with anti-business policies as they did in Hawaii.

Their grip will be impossible to break.

I also predict that businesses and jobs will flee Nevada.

Those of us who saw the problems first hand suggest that you talk with as many well-educated Hawaiian business people who had to pay the tax that you can find.

Bob Hall, active for many years in the Hawaii small-business scene and the Hawaiian tourism industry, now lives in Summerlin.