Arbor Day Look at the Archives: Hawaii’s “Exceptional Tree” Deduction

April 25, 2008

Today is Arbor Day. And to celebrate, we look back at the Tax Policy Blog archives at a post two years ago on one of the wackiest tax laws in the United States: Hawaii’s Exceptional Tree Deduction.

From former TF economist Curtis Dubay:

To mark this occasion we bring to you an amusing personal income tax deduction from Hawaii. The ‘exceptional tree’ deduction is as follows, from the Hawaii Personal Income Tax Instructions:

You may deduct up to $3,000 per exceptional tree for qualified expenditures you made during the taxable year to maintain the tree on your private property. The tree must be designated as an exceptional tree by the local county arborist advisory committee under chapter 58, HRS. Qualified expenditures are those expenses you incurred to maintain the exceptional tree (excluding interest) that are deemed “reasonably necessary” by a certified arborist. No deduction is allowed in more than one taxable year out of every three consecutive taxable years. The deduction is allowed for amounts paid in taxable years beginning after December 31, 2003. An affidavit signed by a certified arborist stating that the amount of expenditures are deemed reasonably necessary must be attached to your tax return. The affidavit also must include the following information: (1) type of tree, (2) location of tree, and (3) description and amount of expenditures made in 2005 to maintain the tree. The affidavit must be notarized.

Specialized deductions such as this inevitably spawn their own interest groups dedicated to the preservation of the deduction. In this case the arborists have the incentive to make sure the deduction remains in the code. Special interest groups make it difficult to remove deductions from the code, which makes fundamental tax reform next to impossible.

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