Political Radar


July 15th, 2014

Former Lt. Gov. James “Duke” Aiona would divert 25 percent of the money collected by the state’s corporate income tax to the rental housing trust fund, hoping to create a financing pool to build more affordable rentals.

A lack of affordable rentals has been identified, along with the state’s high cost of living, as one of the factors behind a growing homelessness problem.

Aiona, a Republican candidate for governor, estimates the idea would generate about $128 million by 2020, enough for about 2,170 new affordable rental units over existing projections.

“We have a lot of working families who are risk of basically sleeping in their cars, sleeping in the parks, or sleeping on the streets, whether it be because they missed a paycheck, they got ill for a while, or whatever it may be,” he said at a news conference Tuesday at his campaign headquarters off Nimitz Highway.

The announcement is the second plank in Aiona’s plan to combat homelessness. In June, the former judge called for the establishment of a homeless court that would offer the homeless treatment and other social services as alternatives to jail. He also proposed that the Hawaii National Guard reach out to homeless veterans.

Public-opinion polls have shown that Aiona might be competitive against Gov. Neil Abercrombie or state Sen. David Ige, the Democratic contenders, and former Honolulu Mayor Mufi Hannemann, who is running as an independent.

While the focus is on the Democrats before the August primary, Aiona, who lost to Abercrombie by double digits in 2010, is slowly rolling out some of his policy themes.

The corporate income tax is a relatively small slice of state tax collections compared with the general excise tax, the individual income tax, and the hotel-room tax. Aiona had once called for a reduction of the corporate income tax to help promote business growth.

Aiona said there is a link between the corporate income tax and affordable rentals, since businesses benefit from a stable workforce that has access to affordable housing. He would also streamline the permitting process to make it easier for private developers to complete rental projects.

Government incentives are necessary, he said, because private developers are otherwise concentrating on market rate projects.

State Sen. Suzanne Chun Oakland (D, Downtown-Nuuanu-Liliha), the chairwoman of the Senate Human Services Committee, who has been an advocate for affordable housing and for boosting the rental housing trust fund, said she would like to hear more about the nexus between the corporate income tax and affordable rentals.

This year, the Legislature and the governor restored the share of the conveyance tax into the rental housing trust fund back to 50 percent. The share had been reduced to 30 percent during the recession. Chun Oakland is looking at other potential sources of revenue for affordable housing, including investors who have vacation properties or who flip units to make a profit, practices that can drive up real estate prices.
“I don’t know if that’s the most appropriate source,” she said of the corporate income tax.

2 Responses to “Rentals”

  1. Kolea:

    Aiona's proposal to direct 25% of the corporate income tax to build more affordable housing is intriguing for several reasons. First, is his acknowledgment that it is fair to tax corporations to help improve the living standards of regular citizens upon whom corporate profits depend. That is a major concession from a Republican politician.

    But why rely upon the corporate income tax to help restore a long overdue balance to the housing market. Or to meet other needs arising from the growing inequality which has caused a steady drop in salaries and wages since the late 70s? If it is true that corporations benefit when employees have a more stable existence, why is that not true about the wealthy in general? Why NOT use the income tax as a source for revenues to solve pressing social problems? Hawaii's school teachers are the lowest paid in the entire United States, when salaries are adjusted for the cost of living. The market teaches us that offering better salaries attracts (and retains) more qualified employees. (Or is that only true about football coaches, university presidents and CEOs?)

    So why not raise taxes on those who have benefited the most from the economy, regardless of whether they are a "corporation" or not, in order to properly fund education? Will not employers benefit from that improvement, just as they would from the creation of more affordable housing?

    Aiona's "policy" proposal is an election year fraud, aimed at appearing to be a "compassionate conservative," and to excite building contractors. It doesn't matter if it is inconsistent or that it contradicts his proposals from his last campaign to cut the corporate income tax, as well as personal income taxes. Because it is never meant to be implemented. The Ayn Rand, free market crowd among his base are likely to understand that and forgive him this, rather than denounce his acceptance of a major argument from progressives that sustained corporate profits depend upon restoring the economic well-being of the rest of us. I smell "socialism."

  2. nonpolitic:

    Ha ha ha! Hear hear! Well said Kolea.

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