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HOUSE OF REPRESENTATIVES

H.B. NO.

2572

TWENTY-FIRST LEGISLATURE, 2002

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO THE CAPITAL GAINS TAX RATE.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The purpose of the Act is to reduce the capital gains tax rate cap for individuals, estates and trusts for taxable years beginning in 2002 through 2005.

SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) If a taxpayer has a net capital gain for any taxable year to which this subsection applies, then the tax imposed by this section shall not exceed the sum of:

(1) The tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of:

(A) The taxable income reduced by the amount of net capital gain, or

(B) The amount of taxable income taxed at a rate below [7.25 per cent,] the rate provided in paragraph (3), applicable to the taxable year, plus

(2) A tax [of 7.25 per cent of] at the rate provided in paragraph (3), applicable to the taxable year, on the amount of taxable income in excess of the amount determined under paragraph (1).

(3) For purposes of this subsection, the tax rates are:

(A) 7.25 per cent for any taxable year beginning after December 31, 1986 and before January 1, 2002;

(B) 6.9 per cent for any taxable year beginning after December 31, 2001;

(C) 6.4 per cent for any taxable year beginning after December 31, 2002;

(D) 6.0 per cent for any taxable year beginning after December 31, 2003;

(E) 5.6 per cent for any taxable year beginning after December 31, 2004;

This subsection shall apply to individuals, estates, and trusts for taxable years beginning after December 31, 1986."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval; provided that if a taxpayer's taxable year includes the effective date of the tax rate changes (unless that date is the first day of the taxable year), then, (1) the tentative taxes shall be computed by applying the rate for the period before the effective date change, and the rate for the period on and after that date, to the taxable income for the entire year; and (2) the tax for the taxable year shall be the sum of that proportion of each tentative tax which the number of days in each period bears to the number of days in the entire taxable year.

INTRODUCED BY:

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