Hawaii Visitors And Residents Can Finally See Things Alike

Hawaii has just received two dubious accolades in relation to the cost of being here. And it made us think about how the same problems impact both residents and Hawaii visitors.

First, the state has been ranked as having the most expensive city in America: Honolulu. That, together with NYC. A study by SmartAsset looked to identify the most expensive cities in the U.S., and you needn’t guess far to know that the answer was right here in Hawaii.

Not only that, but the nonprofit Tax Foundation has proclaimed that Hawaii has the greatest tax burden. The foundation says that the current state/local tax rate for 2022 is 14.1%, with the state/local tax burden per person being $8,410.

A comment from Debi, a regular reader, was made today on this point. “Aloha – Ask me to pay a fee to visit the parks, etc., to help maintain and preserve the beauty of the islands, and I am happy to do so. But don’t ask me to pay a fee because your cost of living is too high. It has gone up for everyone, not just those who live in Hawaii. I won’t ask you to offset my living expenses, so please don’t ask me to do the same for you. But, if you want to share a meal together, I’ll bring plenty and extra!”

From another commenter today: “Unsure how you locals afford it. $8 loaves of bread, $7 bags of tortillas! Insane. Locals told us the cost of homes has doubled in 4 years!! Regardless, we had an amazing time and hope we can afford to return…”

Hawaii visitors take notice – you’re not the only ones paying exorbitantly.

Here’s a place where visitors and residents can share the pain. Both experience the same costs, only in different ways. Let’s look at how it works for residents since we’ve discussed Hawaii accommodations, taxes, and fees ad nauseam.

At one end of the extreme in the U.S. sits Honolulu, where a $312k salary equates to leaving you with the equivalent of only a $100k salary. That contrasts with the other end of the scale, such as in El Paso, Memphis, and Oklahoma City, where it only takes just over $100k to leave you with $100k. These rankings take into account both the cost of living (need we say more), as well as income taxes.

Third in line with the most expensive cities to live in, after Honolulu and New York City, is San Francisco. Rankings also reflect the high taxes in Hawaii, New York, and California. The study determined that on that $312k salary in Hawaii, you’ll also owe the state about $25k in income tax. If you are looking for the cheapest U.S. state to live in, it’s where there is no income tax or very little.

The study used Council for Community and Economic Research cost-of-living data. That reflects housing costs, food, utilities, transportation, and other necessities.

High government spending and liabilities in Hawaii are expensive for all. And Hawaii has the 2nd worst individual income tax in the U.S. Other taxes are among the highest too, including Hawaii’s estate tax.

While Hawaii property taxes for full-time residents are low, the extreme cost of Hawaii homes causes the actual property taxes paid to be on par with the national average.

Then visitors and residents pay GET (general excise tax). That’s Hawaii’s equivalent to sales tax, only worse. Studies have found it to be one of the most egregious in the country since it is added to everything, including food, medicine, etc. It is most burdensome for low-income individuals.

Hawaii has the most expensive home cost in the U.S.

The average cost of a single-family residence here went to over $1 million, in 2021, before coming down slightly. It makes it nearly impossible to get into home ownership, resulting in many people leaving the state. Add to that, home construction costs in Hawaii are second only to New York.

Shipping costs are Hawaii’s hidden nightmare.

The cost of bringing everything into Hawaii is far higher than expected. Visitors and residents experience that when shopping for anything in Hawaii. It’s also one of the driving factors in hotel, restaurant, and grocery costs. That is partly due to The Jones Act, a federal shipping law that can result in the cost of shipping to Hawaii being as much as three to five times higher than shipping abroad.

The Jones Act requires that all goods shipped between U.S. ports be transported on ships that are U.S.-built, U.S. flagged, and crewed and owned primarily in the U.S. In addition, competition is extremely limited. It was previously estimated that The Jones Act might cost the average Hawaii household an extra $2,000+ annually.

How do you afford the high cost of paradise as a visitor or resident?