Are Hawaii's Tech Tax Credit Worth the Cost?

Comment

Comment by David Jacobs on May 14, 2009 at 1:22pm

In Jay's defense (disclosure: he is a friend), when writing for a mass audience it is virtually impossible to write a nuanced piece when your goal is to provoke action. Jay cares deeply about making Hawaii a better home for the technology industry. And it is incredibly frustrating to see a program (no matter how flawed) dismantled without something better being introduced to takes its place. Pointing out the flaws in various ideas and programs is easy. Achieving concensus on a better idea is hard.

With respect to startup funding my personal view is that you need a funding ecosystem where players in each funding round know the players in the round before them. One of the significant problems with 221 is that it introduced a number of seed funding sources that were unknown to the next round players. This meant next round players would have to perform their due diligence from scratch which is much more work than funding a company from an investor they trust to have already addressed many of the due diligence basics.

Comment by David Jacobs on May 14, 2009 at 1:15pm

Re: Income tax for retirees

Actually, for people with employer funded pensions, those pensions along with Social Security are Hawaii state tax free in Hawaii. Couple that with some of the lowest property taxes in the country (for a given home value) and you have a very favorable state (tax wise) for lots of reitrees.

Comment by GB Hajim on May 14, 2009 at 6:28am

My folks have done the same. Place in Florida for the winter and where they claim residency and another near Boston.

Comment by Bruce M. Bird on May 14, 2009 at 5:48am

Hi, GB:

Good post.

I believe that few of the "free" things in life are truly "free". But I agree with you that having access to extremely low cost Internet would do a world of good for Hawaii. And, it's "doable".

I know that reasonable minds can differ on what the proper role of government should be.

As for me, I'm big believer in the general public having "access to tools" (schools, roads, libraries, etc.). Many people might not need (or want) to use a library, but there are many people out there who do. In my opinion, it isn't a much of a "stretch" to go from libraries, to libraries with computers, to libraries with computers with Internet access, to libraries with computers with Internet access and also low-cost Internet access available to the general public.

As a society, we tend to "over think" things. When you compare the cost of accessing the Internet in Hawaii versus other places in the United States (or in the world, for that matter), many, many people are really getting "hosed".

Whether deserved (or not), Hawaii has a reputation for being an "anti-business" state. And a "high cost-of-living" state. For the Legislature to jack up Hawaii's highest marginal state income tax rate --during a recession, no less-- doesn't help.

On a somewhat related note, I know a person who is going to retire in about 5 years. He has quite a bit of wealth and will receive combined pensions in the low six figures. He isn't even looking at Hawaii. Why not? State income tax. Pure and simple. In fact, it's much cheaper for him to own two residences --one in Florida with a 0% state income tax rate (his new principal residence) and one in the state in which he currently lives (second residence). A zero percent state income tax rate versus Hawaii's tax rate on a low six-figure income.

Comment by Ken Berkun on May 13, 2009 at 7:19pm

I like it, sounds like something Yogi Berra might say. And here's one I can learn by:

You can observe a lot by just watching.
Yogi Berra

Comment by GB Hajim on May 13, 2009 at 5:40pm

I don't have numbers for a render farm or server bank, but I'm sure among the Tech Hui membership we could come up with numbers.

Other infrastructure? More fiber optic, free wireless internet (don't laugh at this one, many cities have it), high tech parks on the outer islands, high tech school to work programs (Alu Like does it for the Hawaiians), State sponsorship of high tech / film markets....

Comment by Bruce M. Bird on May 13, 2009 at 5:02pm

Hi, Ken. Sometimes I read something and I just can't get it out of my mind. And then, a few days later, it suddenly dawns on me that the reason it's so memorable is that it's so sarcastic.

Here's one by Paul Newman:

"It's always darkest before it turns absolutely pitch black."

Comment by Ken Berkun on May 13, 2009 at 3:27pm

Yes, Bruce, a Sarcasm Bit is built into each Soundpaper Scanner. It appeals to a certain crowd.

Ken

Comment by Bruce M. Bird on May 13, 2009 at 3:12pm

Hi, GB.

From your previous posts, my sense is that your need for capital is much greater than such a micro-lender bank would provide. But I respect your opinion that more money is needed.

I like a lot of your suggestions. I think that "incubator programs" have a lot of support.

What kind of money is needed for render farm and/ or server bank ?

What other types of high-tech infrastructure are needed ?

Comment by GB Hajim on May 13, 2009 at 2:42pm

I don't think $50k-100 is really worth the time to set up an instrument. You can easily get a line of credit for that amount. I think the base should be around $250k and max at $2.5 million. The other thing is that the State can expand its incubation program and infrastructure. Having reduced cost office space is good (in the incubation facilities), also the sound stages on O'ahu are helpful, but having more access to a renderfarm and/or server bank or at least a climate controlled facility that houses such equipment. The New Zealand government provided the building for WETA's supercomputer and WETA leases it back.

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