|In a letter to Governor Tauese Sunia, Congressman Faleomavaega
informed ASG that both houses of Congress have passed legislation which
would reduce federal taxes by $1.35 trillion over ten years. Under
American Samoa’s tax law, this change in federal law will become applicable
in American Samoa unless the territory enacts a local law to prevent the
change from taking effect.
“I wanted to bring this expected change in tax law to the attention
of the Governor and Fono right away so they will be able to analyze the
bill to determine if they want these changes implemented in American Samoa.,”
said Faleomavaega. “As every single item in the bill is either a
reduction in taxes, an increase in tax credits, or an increase in the availability
of tax deductions, we can be fairly certain that the change will reduce
the income ASG is expecting for the current and future years.” When
signed by the president later this week, portions of the law will be retroactive
to January 1st of this year.
The major provisions of the bill include a new 10% tax rate for
the first $6,000 of taxable income for single taxpayers, $10,000 for single
heads of household, and $12,000 for married couples filing jointly, all
retroactive to January 1, 2001. Effective July 1st, most other tax
rates will be reduced slightly.
In the United States, one time rebate checks will be mailed to taxpayers
by the IRS no later than October 1st . The rebates will be the amount
of income taxes paid in 2000, up to $300 for single taxpayers and $600
for couples. In American Samoa, where there is a 2% alternative minimum
income tax not applicable elsewhere, the calculation of the amount of the
rebate might be different.
Other provisions include tax cuts for married couples, a phased-in
doubling of the child tax credit, an increase in the adoption tax credit,
a phase-out of the estate tax, and an increase in the amount that can be
contributed to retirement savings with tax deferment.
For students and their parents, college tuition costs will be deductible
for most taxpayers, the deduction for interest on student loans will be
made available to individuals with higher incomes, and the amount which
can be contributed to education savings accounts will be increased.
“Given ASG’s current financial situation, I hope that the local
Administration and Fono will take a hard look at this bill, and decide
soon if action is necessary. Options might include reducing government
expenditures to compensate for reduced revenues, enacting a new local law
which would make all or part of the bill passed by Congress not applicable
to American Samoa, or other steps which would ensure that our economy is
moving toward sustained balance,” Faleomavaega concluded.
The bill was passed by the House and Senate on May 26th. The
legislation has been sent to the President and he is expected to sign it
into law sometime this week.