The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the House Committee on Finance on March 2, 2026.
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March 2, 2026, 2 p.m.
Hawaii State Capitol
Conference Room 308 and Videoconference
To: House Committee on Finance
Rep. Chris Todd, Chair
Rep. Jenna Takenouchi, Vice-Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: TESTIMONY SUPPORTING HB1612 HD1 — RELATING TO ECONOMIC DEVELOPMENT
Aloha Chair, Vice Chair and other Committee members,
The Grassroot Institute of Hawaii supports HB1612 HD1, which establishes a business competitiveness goal for the state to be nationally ranked in the top 30 states by 2050.
Hawaii has been consistently named one of the worst states in which to do business by outlets as varied as CNBC, Forbes and the Tax Foundation.[1] The state’s reputation is equally dismal for entrepreneurship, as it is also ranked among the worst states in which to start a business.[2]
It is not hard to understand why. The Tax Foundation’s 2026 State Tax Competitiveness Index specifically mentions Hawaii’s personal income tax rate, the pyramid structure of the GET and our high estate tax rates as reasons for the state’s low competitiveness rating.[3] What’s more, nearly every tax measure that earned praise in the Index — such as the state’s treatment of capital gains income and its property tax rates — is facing a proposed hike this year. And perhaps worst of all is the potential abandonment of the income tax cuts passed in 2024 — which would definitely improve the state’s business competitiveness.
The goal set by this bill is both ambitious and praiseworthy. Achieving it would require a significant change in the state’s approach to taxation, budgeting and regulation.
If we were to meet this goal, however, it would make our state more prosperous while increasing state revenues. There would be more opportunities for Hawaii residents, which would reduce the flight of our friends and family to the mainland. Given what it could mean for the future of our state, we urge you to pass HB1612.
Thank you for the opportunity to testify.
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1] “Hawai’i’s General Economic Competitiveness and Business Climate,” Department of Business, Economic Development & Tourism Research and Economic Analysis Division, May 2025, p.5.
[2] Adam McCann, “Best & Worst States to Start a Business (2025),” WalletHub, Jan. 20, 2025.
[3] Janelle Fritz, et. al, “2026 State Tax Competitiveness Index,” Tax Foundation, October 2025, p. 67.
