Abstract

http://ssrn.com/abstract=2408302
 


 



Marginal Tax Rates Around the Hawaii Itemized Deduction Cliff


Terrance Jalbert


University of Hawaii at Hilo - Department of Business Administration

Gary Fleischman


Texas Tech University

Mercedes Jalbert


The Institute for Business and Finance Research

March 12, 2014

Accounting and Taxation V. 6(1), pp. 25-38, 2014

Abstract:     
The State of Hawaii allows paid State taxes as an itemized deduction on the State income tax return. The deduction is available only for individuals with Federal adjusted gross income less than $200,000. Hawaii also limits total itemized deductions to $50,000 for individuals with Federal adjusted gross income of $200,000 or above. These provisions create a tax cliff that implies extraordinary marginal tax rates. The added dollar of income from $199,999 to $200,000 triggers a loss of the entire tax paid deduction and caps itemized deductions at $50,000. We compute marginal tax rates for adjusted gross income levels around the $200,000 tax cliff. Results indicate marginal tax rates reach levels as high as 367,100 percent. The paper provides taxpayers with concise information regarding the importance of these Hawaii tax cliffs and suggests policy changes.

Number of Pages in PDF File: 14

Keywords: Hawaii, Taxes, State Taxes, Marginal Tax Rates

JEL Classification: H1, H71

Accepted Paper Series


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Date posted: March 14, 2014  

Suggested Citation

Jalbert, Terrance and Fleischman, Gary and Jalbert, Mercedes, Marginal Tax Rates Around the Hawaii Itemized Deduction Cliff (March 12, 2014). Accounting and Taxation V. 6(1), pp. 25-38, 2014. Available at SSRN: http://ssrn.com/abstract=2408302

Contact Information

Terrance Jalbert (Contact Author)
University of Hawaii at Hilo - Department of Business Administration ( email )
808-974-7456 (Phone)
Gary Fleischman
Texas Tech University ( email )
2500 Broadway
Lubbock, TX 79409
United States
Mercedes Jalbert
The Institute for Business and Finance Research ( email )
P.O. Box 5569
Hilo, HI 96720
United States
HOME PAGE: http://www.theIBFR.com
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