The people of Hawaii live in one of the most beautiful places on earth, but they pay a high price for it. The “price of paradise”: how much does it cost?
Hawaii has the highest cost of living in the country. According to the national Tax Foundation, $100 in Hawaii is actually worth less than $85, meaning residents get less value for their money.
Hawaii’s high cost of living means that the HUD considers a family of four making under $93,000 a year to be low income. In Mississippi, the same $100 is worth $115.74, which is 15% more than their income suggests.
It is so expensive to live in Hawaii that more people have been leaving than moving there in the past five years. What are the reasons for Hawaii’s high cost of living? Public policy is to blame for three primary reasons.
Higher Tax Rate of Hawaii
- Increase the rate for those who earn more than $100,000 to $200,
- This will raise $11 million in revenue, which is not a big number, but it will help pay for our schools and state services. It would not affect anyone making less than $100,
- Increase the top rate on all income over $400,000 to $600,
- This will raise $10 million in revenue, which is a little less than a third of the amount needed to fund our schools fully.
State excise taxes are among the highest in the nation when considered as sales taxes. In addition, it is regressive. According to one study, Hawaii’s lowest-income families spend 10.5% of their incomes on getting, while those in the top 1% pay only 1.2%. Hawaii’s healthcare costs alone are estimated to rise by $222 million a year as a result.
Housing Is Unaffordable Due to Land-Use and Zoning Regulations
One-family homes in Hawaii are the most expensive in the nation, with a median cost of more than $1 million. As a result, many residents live with roommates or multiple generations of their families – or are leaving the state altogether.
Many factors contribute to the high cost of housing in Hawaii, but land-use and zoning regulations are among the most important.
Land-use laws determine whether a property is used for agricultural purposes, conservation purposes, or urban purposes. People can build on their properties in urban areas under county zoning regulations.
Many sources claim Hawaii has the strictest zoning regulations in the country. Most residential housing types, including apartments and neighborhoods, are not allowed on 5% of land zoned urban areas.
The Jones Act Increases Shipping Costs
Shipments from the West Coast to Hawaii can sometimes cost up to 300% more than those shipped to Australia.
Almost all of that can be attributed to Section 27 of the Merchant Marine Act of 1920, also called the Jones Act, which requires goods being shipped between U.S. ports to be transported on ships built and flagged in the United States and manned mostly by Americans.
While en route to Los Angeles, a Taiwanese ship may not stop in Honolulu to drop off some cargo. The goods must be transported to L.A. and transferred to a Jones Act ship before being shipped back to Hawaii. Furthermore, Taiwanese vessels cannot drop off goods in Hawaii when returning to Taiwan from Los Angeles. Most goods are imported via ships, and there is little competition leaving Hawaii residents footing a much higher import bill.
Unfortunately, all Jones Act ships have to be built in the United States. The cost of ships built in U.S. shipyards is typically three to five times higher than that of ships built elsewhere. As a result, even Jones Act carriers face increased capital costs and are discouraged from competing.