HI SCR158

Request the Department of Taxation to conduct a study on the advantages and disadvantages of disallowing the dividends paid deduction for real estate investment trusts in Hawaii.

Study must be conducted by tax revenue experts and economists and analyze REIT investments across ten asset classes including tower, industrial, retail, self-storage, lodging, office, health care, specialty, residential, and mixed-use sectors.

Study must estimate revenue changes from disallowing the deduction, including impacts to general excise taxes from hotel operations, other corporate income tax deductions, and differences in property maintenance between REITs and non-REIT owners.

Study must examine other states' treatment of REIT dividends paid deductions, consider possible exceptions, compare general excise tax losses to corporate income tax gains, and analyze REIT capital expenditures during the COVID-19 pandemic.

Study must identify expected REIT projects and their potential tax impacts, and compare long-term REIT investments in Hawaii to non-REIT property owners using acquisition and sale business models.