Report Title:

Income Tax; Withholding

Description:

Provides a blank percentage for the maximum percentage allowed by law for withholding income taxes.

THE SENATE

S.B. NO.

2459

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO WITHHOLDING TAX.

 

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

SECTION 1. The legislature finds that the purpose of the withholding tax is to ensure the payment of income taxes and to allow taxpayers to spread their tax liability over a year's time. The amount withheld from taxpayers, however, can be excessive. Recent reports show that the department of taxation averages approximately $250,000,000 in income tax refunds annually. These are funds that have been overpaid by taxpayers and should rightfully be in their pockets.

The legislature also finds that some of the funds if retained by taxpayers, will eventually be recovered by the State through the general excise tax and other state and county fees and taxes.

The purpose of this Act is to change the amount of income taxes withheld from taxpayers to provide them with more available income and to help stimulate the economy.

SECTION 2. Section 235-61, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) For each withholding period (whether weekly, biweekly, monthly, or otherwise) the amount of tax to be withheld under this section shall be at a rate which, for the taxable year, will yield the tax imposed by section 235-51 upon each employee's annual wage, as estimated from the employee's current wage in any withholding period, but for the purposes of this subsection of the rates provided by section 235-51 the maximum to be taken into consideration shall be [eight] _____ per cent. The tax for the taxable year shall be calculated upon the following assumptions:

(1) That the employee's annual wage, as estimated from the employee's current wage in the withholding period, will be the employee's sole income for the taxable year;

(2) That there will be no deductions therefrom in determining adjusted gross income;

(3) That in determining taxable income there shall be a standard deduction allowance which shall be an amount equal to one exemption (or more than one exemption if so prescribed by the director) unless (A) the taxpayer is married and the taxpayer's spouse is an employee receiving wages subject to withholding, or (B) the taxpayer has withholding exemption certificates in effect with respect to more than one employer. For the purposes of this section, any standard deduction allowance under this paragraph shall be treated as if it were denominated a withholding exemption;

(4) That in determining taxable income there also will be deducted the amount of exemptions and withholding allowances granted to the employee in the computation of taxable income, as shown by a certificate to be filed with the employer as provided by subsection (f); and

(5) If it appears from the certificate filed pursuant to subsection (f) that the employee, under section 235-93, is entitled to make a joint return, that the employee and the employee's spouse will so elect."

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

SECTION 4. This Act shall take effect on July 1, 2004.

INTRODUCED BY:

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