NCPA - National Center for Policy Analysis

Why They Are Calling Hawaii a "Socialist State"

May 17, 2002

Take an island paradise, with balmy weather and throngs of tourists, add a heavy dose of socialism, and you get an economic basket case -- bypassed by economic expansion over the past 10 years. Hawaii has a long tradition of redistributing wealth -- and an economy to prove it.

  • Honolulu has cellar-level ratings in five-year wage growth and job growth -- and high-tech gross domestic product growth over last year.
  • Hawaii's personal income tax on its wealthiest citizens -- defined as those having $80,000 in annual income -- is 8.25 percent.
  • The state's income tax rate is 6.4 percent on corporate net income over $100,000 -- as well as a 4 percent gross receipts tax on all businesses, profitable or not.
  • Until recently, many homeowners paid into a hurricane relief fund -- which the state raids periodically to balance its budget.

Small businesses, 95 percent of Honolulu's employers, are being crushed under a law that requires employers to provide medical insurance to all employees who work more than 20 hours a week (at an average cost of $2,200 per capita annually). Hawaii is the only state with the requirement.

Twenty-four percent of the islands' total work force is unionized -- compared to 12 percent nationally. Honolulu's growth rate is on par with rust belt cities Flint, Michigan, and Youngstown, Ohio.

Source: Lynn J. Cook, "Trouble in Paradise," Forbes, May 27, 2002.

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