It鈥檚 not often that state lawmakers express their justification for imposing taxes in terms other than 鈥淲e need the money to fund essential services and programs.鈥 But how about this? The following language is from an actual bill:

The Legislature finds that the federal government has significantly raised the threshold for the federal estate tax. The federal estate tax grants an exemption of $5,490,000 per individual and up to $10,980,000 for a surviving spouse; provided that the surviving spouse elects to use portability of the predeceased spouse’s exemption on the predeceased spouse’s estate tax return.

Estates valued at less than these amounts are exempt from paying federal estate taxes.

The recently enacted Public Law No. 115-97, originally introduced in Congress as the Tax Cuts and Jobs Act, doubles the threshold to approximately $11,180,000 and $22,360,000, respectively, and will result in a reduction in federal estate tax revenues.

According to Internal Revenue Service data, 21 estates in Hawaii paid a total of $23,471,000 in federal estate taxes in 2015.

The Legislature further finds that these changes to the federal estate tax provide the state with an opportunity to benefit Hawaii residents. By amending Hawaii’s estate tax thresholds and rates, the state can capture some of the money that certain residents will no longer be required to pay to the federal government and redirect that money to the state.

This, by the way, is from , Senate Draft 1.

As it now exists, the bill would jack up the Hawaii estate tax by adding a new top tax rate of 20 percent to be applied to taxable estates over $10 million.

It would also hike the Hawaii conveyance tax on purchases or sales of condominiums or single-family residences valued at $2 million or more, and there the tax would increase between 66 percent and 220 percent depending on the value of the unit being sold.

House lawmakers have gutted and replaced a measure that now calls for a substantial increase in the estate tax on high-end properties. Anthony Quintano/Civil Beat/2018

The bill as the House passed it in 2017 looks nothing like the current bill. Surprise, surprise, this bill is another victim of the much-hyped 鈥済ut and replace鈥 technique.

What does that mean? The only thing about a bill that can鈥檛 be changed during its journey through the Legislature is its title, and under the Hawaii Constitution, the contents of a bill must relate to its title.

Therefore, if a legislative committee has before it a bill with a broad title like 鈥淩elating to Taxation,鈥 it can amend the bill by gutting it and replacing its entire contents with something very different.

Gut-and-replace legislation is still alive and well at the Capitol.

This bill as the House passed it, for example, was an income tax bill relating to the low-income householder renters鈥 credit. But because its title is 鈥淩elating to Taxation,鈥 the income tax contents can be deleted and replaced with hikes in the estate and conveyance taxes.

Now, the Senate adopted some rules that sound like they wanted to curb the 鈥済ut and replace鈥 technique. Senate Rule 54(2) says, 鈥淭he fundamental purpose of any amendment to a bill shall be germane to the fundamental purpose of the bill.鈥

In practice, however, gut-and-replace is still alive and well, and a technique in the playbook of many of the House and Senate committee chairs.

So, as our legislative session finally winds down, there will be lots of surprises such as bills previously thought dead being resurrected by incorporating their contents into other bills.

It ain鈥檛 over till it鈥檚 over, folks!

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