Abercrombie aims to patch last wounds of fight over pension tax
By Derrick DePledge, The Honolulu Star-Advertiser | |
McClatchy-Tribune Information Services |
Abercrombie had proposed a pension tax in 2011 to help reduce a projected state budget deficit, an idea vehemently opposed by seniors and rejected by
In an open letter to seniors and retirees in an advertisement in the
"I learned a valuable lesson and the message was heard loud and clear," the governor says in the ad. "We will never go back."
The pension tax has returned like a boomerang at Abercrombie at an inconvenient time in the primary campaign. Ige had brought up the issue as a campaign theme, but the governor's decision this month to withdraw from three of four debates hosted by AARP Hawaii ensured that it would remain alive as a subplot.
The issue has also bled into the Democratic primary for
Schatz said he disagreed with the governor on the pension tax in private.
In Abercrombie's tax and benefit adjustment plans to control the deficit during his first year in office in 2011, Ige said, "two-thirds of balancing the budget was really on seniors."
The state senator said it was not only Abercrombie's policy recommendations, but his attitude that turned many people off. While the governor spoke of the need for shared sacrifice, he also had awkward confrontations with lawmakers at public hearings and with retirees at town hall meetings.
"I don't know whether he thought he had a mandate because he won handily or whatever the case may be," Ige said.
While the pension tax turned out to be a political mistake, the idea grew from a sound policy rationale.
But the commission has acknowledged the potential impact of a pension tax on seniors who have already planned for their retirement. The commission has urged policy analysts to monitor the shift toward taxable 401(k) plans and other defined-contribution plans, since market forces could lessen the disparity over time. If a pension tax is imposed, the commission has suggested that it be phased in over time and exclude an annual base amount of at least
"Maybe the administration did not articulate it very positively," said Rep.
Abercrombie's pension tax would have exempted many low- to middle-income retirees and would have generated about
Ige, the chairman of the
Ige and his "
The general excise tax is the state's largest single source of revenue, and an increase would have had a far broader impact on the state's economy than a pension tax.
Ultimately,
Abercrombie, at first, was defensive about the defeat of the pension tax and singled out AARP Hawaii.
"People are going to catch on to what the
In an interview with Civil Beat, the online news site, Abercrombie said he would "roll over"
But Abercrombie never revived the pension tax. This year, the governor called for income tax exemptions for low- to middle-income seniors and the doubling of a refundable food and excise tax credit for seniors. The ideas, like many proposed tax breaks and incentives, did not advance at
Abercrombie, in his ad in the Sunday newspaper, says his administration will "continue to fight for a brighter future for
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