Income Tax Investment Credit

Establishes a tax credit against income tax liability for
investments that are made in Hawaii, and stay in Hawaii for at
least five years.

THE SENATE                              S.B. NO.           977
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended
 2 by adding a new section to be appropriately designated and to
 3 read as follows:
 4      "235-    State investment tax credit.  (a)  Each taxpayer,
 5 who files an income tax return for a taxable year, and who is not
 6 claimed or is not otherwise eligible to be claimed as a dependent
 7 by another taxpayer for Hawaii state individual income tax
 8 purposes, may claim a state investment tax credit against the
 9 taxpayer's income tax liability for the taxable year for which
10 the income tax return is being filed; provided that the taxpayer
11 has made a financial investment in any type of entity or person
12 doing other than business in Hawaii through a stock brokerage
13 firm that is located within the State; and provided further that
14 the investment stays in Hawaii for at least five years.
15      (b)  The amount of the tax credit shall be equal to      
16 per cent of the investment made by the taxpayer during the
17 taxable year for which the income tax return is being filed, but
18 shall not be more than $        in any one taxable year.

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                                     S.B. NO.           977

 1      (c)  No tax credit shall be allowed under this section for
 2 any portion of the investment for which a deduction was taken
 3 under section 179 or other sections of the Internal Revenue Code
 4 or under other sections of this chapter.
 5      (d)  The tax credit claimed by a taxpayer pursuant to this
 6 section shall be deductible from the taxpayer's income tax
 7 liability, if any, for the tax year in which the tax credit is
 8 properly claimed.  If the tax credit claimed by a taxpayer
 9 exceeds the amount of income tax payment due from the taxpayer,
10 the excess of tax credit over payment due may be carried over
11 into future years until exhausted.
12      (e)  The director of taxation shall prepare forms as may be
13 necessary to claim a tax credit under this section.  The director
14 may also require the taxpayer to furnish reasonable information
15 so that the director may determine the validity of the claim for
16 the tax credit made under this section.  The director may adopt
17 rules necessary to effectuate the purposes of this section
18 pursuant to chapter 91.
19      (f)  All claims for tax credits under this section,
20 including any amended claims, shall be filed on or before the end
21 of the twelfth month following the close of the taxable year for
22 which the tax credits may be claimed.  Failure to comply with the
23 foregoing provision shall constitute a waiver of the right to
24 claim the tax credit.

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                                     S.B. NO.           977

 1      (g)  For the purposes of this section:
 2      "Investment" means money that is placed with a business,
 3 company, or other person in Hawaii that is separate from the
 4 taxpayer who has placed that money to obtain an income or
 5 profit."
 6      SECTION 2.  New statutory material is underscored.
 7      SECTION 3.  This Act, upon its approval, shall apply to
 8 taxable years beginning after December 31, 1998.
10                           INTRODUCED BY:  _______________________