An effort by some local real estate investors to end a Hawaii tax deduction for real estate investment trusts appears to have fizzled at the state Legislature this year.

Hawaii lawmakers didn’t hold any hearings on three bills aimed at generating additional state tax revenue by eliminating the deduction, effectively killing House Bill 2073, Senate Bill 2492 and House Bill 82. Today is the deadline for bills to pass from the House to the Senate or vice versa.

The inaction followed publication of a study in December by the state Department of Business, Economic Development &Tourism on the impacts of the deduction.

The report, which cost $90,000 and was ordered after contentious hearings over the REIT tax issue at last year’s Legislature, estimated that the deduction cost the state $16.3 million in 2014 and between $300,000 and $13.3 million in each of the prior five years.

REITs were created by Congress in 1960 as a way for small investors to buy stakes in big income-producing properties such as shopping centers and office towers.

Under federal law that is mirrored by every state except New Hampshire, investors who own shares in a REIT pay tax on income they receive from the REIT, and this tax goes to states based on where each investor resides. This tax treatment excuses REITs from paying state income tax on income produced from property in the same state because REITs must distribute at least 90 percent of their income to shareholders.

REITs with Hawaii property include CNL Lifestyle Properties Inc. (Wet’n’Wild Hawaii), Taubman Centers (International Marketplace), Forest City Realty Trust (Kapolei Lofts), Glimcher Realty Trust (Pearlridge Center) and General Growth Properties Inc. (Ala Moana Center, Whalers Village and Prince Kuhio Plaza). Others own hotels, public storage facilities, medical centers, office buildings, a college dormitory and mortgages.

Eliminating the deduction was advocated by several local real estate investors as well as other Hawaii business leaders, several unions and the Hawaii Appleseed Center for Law and Economic Justice.

The National Association of Real Estate Investment Trusts opposed the bills, and commissioned local economist Paul Brewbaker to produce a 41-page study that concluded Hawaii’s economy would be hurt if the tax deduction were eliminated.