Technology companies are a major driver of the U.S. economy.
Although Hawaii is an ideal location for a tech company, with a handful of exceptions, there hadn't been many success stories to come off our shores.
In 2001, sensing a missed opportunity, the legislation commonly known as Act 221 was passed with the idea of stimulating the growth of the local technology community.
The results have been very positive and point toward success in expanding Hawaii's economic base.
From 2002 to 2007, Qualified High Tech Businesses (QHTBs) have received more than $900 million in out-of-state investment capital.
In that same time period, QHTBs spent $1.4 billion in Hawaii.
Under Act 221, about $295 million of this money was claimed as a tax credit by local investors. That's a 4 to ratio of private-sector, out-of-state dollars for every $1 of tax credits claimed.
QHTBs spend 87 percent of their expenses in Hawaii. Talk about buying local.
These figures were garnered from a report (www. state.hi.us/tax/pubs/ 2008hitec_rpt08a_rev2.pdf) released by the Department of Taxation in August of this year. This report is the first substantial set of data released since Act 221 was passed.
Other good news
In 2007, QHTBs employed a total of 1,450 full-time employees and hired 2,118 independent contractors (each of who could involve more than one person).
These are typically higher- paying jobs, the kind that parents from the plantation hoped their kids could get with a good education.
In fact, according to "Innovation and Technology in Hawaii: An Economic and Workforce Profile," a report released by the Hawaii Science and Technology Council, tech jobs pay on the order of $1,500 more per month than other jobs in Hawaii.
How does it work?
Under Act 221, investors receive a 100 percent tax credit for investments in QHTBs. Invest a dollar in a QHTB, and you get that dollar back in the form of a tax credit. Sure seems like a good deal all around for local investors.
With all of this information at hand, it seems obvious that Act 221 is stimulating the expansion of tech in Hawaii. It's a wonder that some in the community want to end the law.
Certainly, everyone can relate to having to cut expenses. But curtailing Act 221 just doesn't seem prudent, when its costs are responsible for disproportionately larger gains, not just in tech but for the local economy as a whole.
Hawaii certainly could use another industry besides tourism and the military.
This article is republished with permission from a column that previously appeared in The Honolulu Star Bulletin (www.starbulletin.com) on December 29, 2008.
