By Troy Torres
(Tumon, Guam) The federal government may be reimbursing the government of Guam partially for the payment of Earned Income Tax Credit for the first time.
According to news from Congressman Michael San Nicolas, House Resolution 5687 is on its way to the United States Senate after passing in the House and, if signed by the President, will rebate 75 percent of EITC payments to territories that mirror the U.S. tax code.
Guam's income tax code mirrors the U.S. tax code.
The EITC has grown to nearly half of the island's annual payments of tax refunds, which hovers around $130 million. This means that if HR 5687 passes into law, the federal government will rebate Guam between $40 million to $50 million each year.
That kind of cash infusion, if the governor holds the line on spending and the Legislature does not appropriate what some idiotic senators would consider unappropriated revenue for their political Christmas trees and special interest giveaways (think Tourist Attraction Fund), finally will mean long-term deposits into the Income Tax Refund Reserve Fund.
Three years's worth of rebates on the EITC that are parked into the Reserve Fund will mean an entire year's worth of tax refunds. Translated: within three years, there will be an account filled with enough money to pay every tax refund filed by January of every year. Taxpayers no longer will have to wait for their money.
The EITC is a federal program that offsets the tax liability of the working poor and gives them credits on their income taxes that often translates into big tax refunds. It was designed as an incentive for people to enter the workforce, where they likely will start with low-wage and low-hour jobs. Rather than joining the welfare rolls, the federal government wanted these people to work, but not to lose the value of the benefits they would receive from welfare. These tax credits (EITC) are designed as a reward to the poor for working.
Because it is a federal income tax program, the federal government paid the EITC directly, except to the territories that mirrored the federal tax code but did not remit federal income taxes to the U.S. Government. Guam is one such territory.
Like the other territories that kept federal income taxes paid, Guam had to pay the EITC out, but the federal government did not reimburse Guam for the cost of its program.
If this legislation passes, in essence, Congress will be solving Guam's perennial problem with paying tax refunds on time.
Here is the news release from the Office of Congressman Michael San Nicolas:
The House of Representatives passed HR 5687 the Emergency Supplemental Appropriations for Disaster Relief and Puerto Rico Disaster Tax Relief Act, 2020
Within HR 5687 is language to rebate 75% of EITC to Territories with tax codes that mirror the U.S. tax code.
"Our advocacy for our brothers and sisters in Puerto Rico continues to pay off for Guam, as our need for EITC reimbursement was included in HR 5687 that has centered on the disaster relief needs of Puerto Rico," opened Congressman San Nicolas. "With a 75% reimbursement, Guam will recover approximately $40 million in EITC costs every year, enabling us to pay tax refunds faster, address our hospital and public safety needs, and start getting some roads repaired," Congressman San Nicolas added.
"Furthermore, I again look forward to engaging our strong bi-partisan relationship with the local Republican Party of Guam to protect the EITC reimbursement language in the Senate, and secure the support of the Trump administration," Congressman San Nicolas concludes.