HI HR19

Requests the Department of Taxation conduct a study on the advantages and disadvantages of disallowing the dividends paid deduction for real estate investment trusts (REITs) under Hawaii state law.

Study must estimate the revenue impact of disallowing the deduction, including effects on general excise tax collection from hotels owned by REITs and potential differences in property maintenance between REITs and non-REIT owners.

Requires analysis of other states' policies on REIT dividend deductions and any resulting impacts or effects on those states.

Study must consider possible exceptions to disallowing the deduction, including REITs with majority assets in Hawaii and revenue from REIT-owned hotels.

Resolution identifies a tax anomaly where REITs operating in Hawaii but paying dividends to out-of-state shareholders result in no Hawaii income tax collection, while REITs own more real estate per capita in Hawaii than in any other state.