The framework for a Real Estate Investment Trust (REIT), when established by Congress in 1960, provided Americans — particularly the little guy — with opportunity to invest in and draw benefits from large-scale, income-producing real estate without owning the property itself.

Over the decades, here and across the nation, REITs — modeled after mutual funds — have helped build local communities through new development. In Hawaii, the corporations own several high-profile properties such as Ala Moana Center, the International Market Place and Hilton Hawaiian Village Waikiki Beach Resort.

However, unlike other businesses, REITs in Hawaii and most states are effectively exempt from state income tax. Instead, shareholders (1 in 5 Americans invest in REITs through retirement savings and other investments) pay the income taxes in the states in which they live.

In Hawaii’s case, we have more REITs per capita than any other state, and a vast majority of the shareholders live elsewhere. This untapped source of revenue for Hawaii is reason enough for state lawmakers to insist that Senate Bill 301, which disallows state tax deduction for dividends that REITs pay to shareholders, gets robust debate.

The proposal is the latest effort, going back five years, to clamp down on the corporate tax deduction. In 2014, it cost the state $36 million, according to a study ordered by the Legislature. More recent estimates peg the annual loss as high as $60 million.

However, it should be noted that tax officials estimate the bill would likely generate far less in extra taxes — about $2.2 million in the first year, then $10 million yearly — as REITs would adopt other strategies to limit state tax liabilities. Still, the measure raises weighty questions about ongoing economic tradeoffs in the islands.

Two years ago, a similar bill was blocked by a committee chairperson who deemed it an unimportant issue. That was a mistake. The matter is increasingly important as Hawaii is in need of more revenue to fund infrastructure and an array of projects and programs that our community, and even REITs themselves, depend on.

Together, scores of REITs own property in the islands with an estimated total value of $18 billion that earns an estimated $1 billion in profits annually. SB 301’s supporters persuasively argue that Hawaii taxpayers are essentially subsidizing the costs of government services that support properties owned by these trusts. That seems unfair.

Another fairness question: Why should REITs be allowed to avoid a tax that differently structured companies must pay? In written testimony, local developer Peter Savio asserted: “All we are asking is that they pay 6.4 percent of the income earned in Hawaii to the state to support our community like the rest of us do.”

Further, Savio pointed out that New Hampshire taxes REITs and still has more REIT-owned properties per capita than the median U.S. state. However, every other state allows the corporate tax deduction. Also, REITs — or their tenants — do pay general excise and property taxes on rents received and property owned, as do the rest of us who have rental income or property.

One of the bill’s opponents, the Hawaii Association of Realtors, contended in testimony that following New Hampshire’s lead could discourage investment in Hawaii REITs and “negatively impact the economy.” That’s worth exploring.

Without a doubt, scores of REITS in Hawaii deserve credit for commercial real estate ventures that have spurred significant economic activity and job opportunity in the construction, resort, restaurant and retail industries, as well as office and industrial leasing.

However, if the tax exemption were eliminated, REITs would still receive generous federal tax exemptions, and continue to benefit from the low property tax rate.

State lawmakers must carefully weigh this ripe-for-debate issue — with the aim to most effectively benefit Hawaii’s taxpayers, not another state’s coffers.