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Veto preserves high-tech tax credit

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Gov. Linda Lingle has vetoed bills that would have capped itemized deductions for higher-income taxpayers and ended a high-technology tax credit program early to help with state’s budget deficit.

State lawmakers wanted to temporarily cap itemized deductions on the wealthy to save an estimated $26.3 million a year toward the deficit. Lingle said the bill could have discouraged donations to charity.

Lawmakers had also agreed to end a high-technology tax credit program known as Act 221 in May, instead of December, to save an estimated $13 million. The bill would also have extended a research tax credit for one year.

Lingle said that while extending the research tax credit was beneficial, ending Act 221 early would create negative economic impacts. 

"I am vetoing this bill to send the message that Hawaii remains open for business and that we will live up to our commitments and keep the promises we have made," Lingle said in a statement.

Lt. Gov. James "Duke" Aiona, while serving as acting governor while Lingle was in China and Japan in June, vetoed a bill that would have suspended investors’ ability to claim high-technology tax credits for three years to help with the deficit. Investors, who can claim the credits over several years, had threatened to sue if the bill became law.

State House and Senate leaders have said that the tax restrictions were adopted prior to the May forecast by the state Council on Revenues and may no longer be necessary. The council projected stronger tax collections.

Lawmakers have the option of returning for a one-day veto override session on Tuesday. Senate leaders have said they are interested in returning to consider some veto overrides, while House leaders are undecided.

 

 

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