Hawaii Kills Hi-Tech

Hawaii's last Republican governor, Linda Lingle, let the legislatures kill the hi-tech business credits, known Act 221, and with that came the swooshing sound. The dream of making Hawaii a cutting edge, hi-tech business arena was flushed down the toilet.

Act 221 allowed pre-approved hi-tech companies to offer investors 100% of their investment back over 5 years using state tax credits. Hawaii, a state dependent on tourism, promoted Act 221 as a way to move away from the state's dependence of visitor travel, took several large steps backwards.

Act 221 No Picnic

Act 221 was no picnic to navigate or to use. What most people fail to realize is that hi-tech companies wishing to utilize the program, had to be pre-approved and there was a lot of ambiguity over what the state considered hi-tech and what it didn't. Worse, investors had to be pre-approved to receive the tax credit, which meant if a business had a dozen potential investors, each had to be willing to go through the process of state's scrutiny.

State enjoys surplus

Meanwhile, the very fears the legislatures cited when they voted to kill Act 221 tax credits, that of mounting budget deficits and possible layoffs has not been realized. Actually the state is enjoying a budget surplus since they capped the counties share of the hotel tax revenues and visitor arrivals have boomed.

Overtaxed

Today the state of Hawaii offers business start-ups one of the nation's highest state & corporate tax rates. Hawaii generally falls around the bottom when as a far as most business friendly. Visitors make out worse, of course not until they leave... On checkout, hotel taxes add around 25% to your bill. Auto rental fees & can be as high as 50%. But at least everyone smiles and says, "Aloha."

More to Come

I will continue to cover the pros & cons of being a Hawaii-based hi-tech from the inside out.

Aloha,

Alan Rudo