|Congressman Faleomavaega has written to Governor Tauese
Sunia informing him of changes which could be made to American Samoan law
to enable a majority of taxpayers in the territory to obtain much of the
child tax credit available under current law, yet still permit the American
Samoa Government to retain the tax revenue it needs to provide public services.
The change in law would require action on the part of both the Fono and
the Chief Executive.
“Not long ago, Governor Sunia asked me for assistance in either
repealing the applicability of federal child tax credit laws to American
Samoa, or in enacting a new law which would authorize the Federal government
to pay the entire child tax credit obligation to all eligible taxpayers
in the territory,” said Faleomavaega.
The child tax credit law has dealt a financial blow to the American
Samoa Government. In 1998 and 1999, the local government paid out
over $1.3 million to taxpayers based on their child tax credits.
“This has been a blessing to our local taxpayers,” noted the Congressman,
“but it has made it even more difficult for ASG to achieve financial stability.
Under this provision of law, the majority of taxpayers who would normally
pay two percent of their income in taxes to ASG get all of that money refunded
to them, reducing significantly this source of revenue to the local government.
To make matters worse for ASG, new federal legislation enacted this year
doubles the amount of the child tax credit over the next ten years.”
“In addition to the portion of the child tax credit ASG is obligated
to pay under current local law, the Federal government has broadly interpreted
federal law to include residents of the territories in a second portion
of the child tax credit law,” continued the Faipule. “Under this
interpretation, the U.S. government has paid over $6.5 million to American
Samoa’s taxpayers in child tax credits since 1998. In many cases,
all of the social security and medicare taxes withheld from local wages
are being returned to the taxpayers, yet the taxpayers continue to receive
credit for contributing to the Social Security Trust Fund, and remain eligible
for future benefits.”
“After a careful review of current Federal and American Samoa tax
law and how these laws have been implemented, I have determined that ASG
can repeal the portion of the child tax credit laws that obligate it to
pay a portion of the credits, and leave in place the portion of the laws
that the Federal government has agreed to pay,” declared Faleomavaega.
“I have suggested that the Governor and Fono consider this option
as a method of restoring this traditional source of local revenue, and
am available to discuss this and other options while I am home this week,”
noted the Congressman.
In his letter to the Governor, the Congressman expressed his concern
in amending Federal law as applied to American Samoa, saying:
“Under current law, American Samoa has total control over its tax
law. The other territories are envious of this position and often complain
about this difference. American Samoa has maintained more local autonomy
than most other territories, and I believe this has served us well.
Asking Congress to pass legislation to change our tax law, even for only
this one issue, would invite additional changes, some of which might not
be as welcome as the one we requested. We have total local autonomy
on taxes, and I strongly believe we should keep it that way!”