HI HB1835

Department of Taxation must develop a plan and proposed legislation to implement a flat income tax rate not exceeding three percent of taxable income, ready for implementation no later than the 2017 taxable year.

Flat tax shall replace the existing income tax schedule in Hawaii Revised Statutes section 235-51 and dedicate a percentage of income tax revenues to the State's Medicaid program under the Department of Human Services.

Department of Taxation may work with Department of Budget and Finance, Department of Human Services, the legislature, and other departments to develop the plan and legislation.

Plan and proposed legislation may include repealing tax deductions and exemptions as needed, gradual implementation through 2017, establishing a special fund for Medicaid revenues, and establishing a task force to recommend appropriate tax rates based on past five years of revenue.

Department of Taxation must submit progress reports to the legislature twenty days before the 2015 and 2016 regular sessions, and submit proposed legislation twenty days before the 2016 regular session.