Taxpayers owe the State of Hawaii millions in unpaid taxes. How much? Delinquent taxes reached $456.1 million at the end of fiscal year 2014, according to the State of Hawaii Department of Taxation Annual Report, 2013-2014. (I calculated this amount by adding the $429.9 million delinquent tax balance and the $251.7 million in new delinquent referrals, minus the $225.5 million collected last fiscal year.
It bothers me that Hawaii has millions in uncollected taxes (last year saw 3,553 liens filed and $31.3 million in uncollected tax write-offs), and there’s not much we can do about it. We can harass them through letters or threaten them with a lien (and possibly force them out of their home) or subject them to wage garnishment (deduct money directly from their paycheck). None of that makes people want to pay taxes or helps people appreciate all the services that our taxes pay for.
Maybe we need a different way to pay taxes, one that doesn’t involve money. Maybe we need a way to give taxpayers some tax relief and allow them to pay taxes, student loans, and fines “in lieu of money” – that is, through goods and services.
Paying taxes through goods and services would provide tax relief while showing that we value everyone’s contributions, big or small. It could make it easier and less stressful to pay taxes. It could let us share our time, knowledge, and experience with our community. It could give taxpayers more choices in how we interact with government.
How could an “in lieu of money” tax relief program work? Here are a few examples:
* In lieu of income taxes and fines. A hair stylist could pay part of their income taxes in free haircuts to low-income individuals as part of a work-training program. This would give individuals confidence during job interviews and benefits the hair stylist because they may have future customers. A retail clerk could pay part of their income taxes by providing daycare or after-school care at public schools or local parks. This would give working parents access to childcare and help individuals keep more of their wages.
* In lieu of property taxes. A farmer could pay property taxes in fruits and vegetables that could be delivered to public schools or sold at farmers’ markets. This would give students access to fresh, local produce and guarantee a market for some of the farmer’s harvest. A retired senior could pay property taxes by mentoring small businesses and nonprofits. This would give small business owners and local organizations access to experienced business people, while keeping seniors active and connected to the community.
* In lieu of student loan repayments. A teacher could repay Hawaii student loans by participating in after-school mentoring or tutoring for adult education programs. This would provide help for students who want to learn and help new teachers keep more of their wages. A lawyer could repay Hawaii student loans by working on cases for the public defender or prosecutor, teaching classes, or offering free legal advice during community sessions. This would give individuals access to free or low-cost representation or advice.
Who could benefit from this program? Families at the border of low-income and middle-income, where a slight increase in income might mean a reduction in government aid… Recent graduates struggling to repay student loans in a tough job market… Families who are land-rich (for Hawaii) but bank-account poor (anywhere in the country)…
Of course, there would have to be some guidelines in place:
* Limits on “in lieu of money” payments. We would need to set a maximum amount of taxes, student loans, or fines that would qualify for the program. We might cap the program annually at $2,400 in tax payments, student loan repayments, or fines. This would reduce an individual’s monetary tax payment by up to $200 per month; the balance would be paid in cash.
* Caps on assets. People could qualify for this alternative tax payment program by having limited income, a limited amount of cash in the bank, and a single home that they use as their primary residence (no vacation homes or timeshares).
* Simple rate schedules. We would need fair, consistent, and easy to understand rate schedules that convert money owed to the government into goods and services. Ideally, rate schedules would be set by quality, skill, and experience, but there’s no easy way to rank products or capabilities across all professions. Maybe we could set the value of goods at cost plus 5%, and hourly rates based on education level (high school diploma/GED, Associate’s degree, Bachelor’s degree, Masters degree and higher).
* Fair and reasonable negotiators. We would need fair and reasonable negotiators who could approve and suggest accepted “in lieu of money” goods and services. The advocates could be program participants themselves.
The truth is that money is not our society’s most valuable commodity. There are many other ways to contribute to the community, pay it back, and pay it forward. What do you think? Could an “in kind” tax relief program succeed?