[Congressional Record Volume 147, Number 20 (Tuesday, February 13, 2001)]
[House]
[Pages H260-H261]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           PRESIDENT BUSH'S TAX PLAN AND ITS EFFECTS ON GUAM

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2001, the gentleman from Guam (Mr. Underwood) is recognized 
during morning hour debates for 5 minutes.
  Mr. UNDERWOOD. Mr. Speaker, considering that the Committee on Ways 
and Means of the House of Representatives has begun hearings on 
President Bush's tax plan, I thought it important to speak about the 
impact such a plan will have on my home island, the territory of Guam.
  At the outset, let me just say that I fully support tax relief for 
the people of Guam, as well as for hardworking taxpayers across the 
country, especially for middle- and low-income families. However, I 
think it would be irresponsible for me if I did not raise the concerns 
that the President's tax plan would have on Guam.
  Unlike the rest of the Nation, Guam and the Virgin Islands are the 
only U.S. jurisdictions which have tax systems which mirror the U.S. 
Internal Revenue Code. This means that Guam's tax law mirrors the 
Internal Revenue Code as required under Guam's Organic Act of 1950. 
Whatever tax policies are implemented at the Federal level will take 
effect at the local level without input from the people of Guam or the 
government of Guam.
  Unlike the States, however, the tax cuts for Guam will come from the 
government of Guam, not the Federal Government, since these revenues 
collected in accordance with the IRS code are deposited with the 
government of Guam. Therefore, the immediate issue here is the 
disruption of the revenue stream for the government of Guam, a concern 
which will have a direct impact on needed services by the government of 
Guam and the local economy.
  The government of Guam anticipates a 30 to $50 million reduction in 
revenues from the President's plan. Considering that the government of 
Guam is projecting $243 million in income tax revenue for this year, 
such a decrease in revenue will greatly impact Guam. If the government 
of Guam had a surplus, I probably would not be speaking about this 
issue, but we do not. Guam's economy is still rebounding from the 
effects of the Asian financial crisis, particularly since much of our 
economy relies heavily on tourists from Japan and other Asian 
countries.

                              {time}  1245

  Guam's unemployment rate is a staggering 15 percent, more than three 
times the national average. It is for this reason that I am asking my 
House colleagues, particularly those who sit on the Committee on Ways 
and Means, to consider proposals that would ameliorate the anticipated 
loss in revenue,

[[Page H261]]

while strengthening both the local economy and providing needed 
services.
  The easiest way, of course, is a direct offset by the Federal 
Government for the revenue lost that could be targeted for specific 
social and economic needs, like school construction and health care in 
Guam, and that could be phased in over the same period that the tax 
plan is phased in.
  The other way would be for the Federal Government to consider several 
proposals that deal with tax equity for Guam, Federal obligations to 
Guam that have not been fully paid, or other important issues in this 
very complex Federal territorial relationship. These include tax equity 
for foreign investors in Guam; Federal payment for the Child Tax 
Credit; Federal payment for Earned Income Tax Credit; supplemental 
security income for U.S. citizens in Guam, a program that is not 
extended to U.S. citizens in Guam; lifting the Medicaid cap for Guam 
and adjusting the Federal Matching Rate; Compact Impact Aid for Guam; 
and reimbursement from the Immigration and Naturalization Service for 
the cost of detaining and housing foreign aliens.
  Considering the implications of Federal policy on Guam and the other 
U.S. Territories, I think it is appropriate and responsible to raise 
these important issues in the context of the President's plan.
  In the long term, I think it is incumbent upon the Government of 
Guam, the Guam legislature, and the Guam business community to review 
Federal tax implications to Guam's economy and determine whether or not 
to delink from the U.S. Tax Code. But the immediate issue before us is 
the impact of the anticipated tax plan.
  Last week I wrote to Treasury Secretary O'Neill urging him that 
special consideration be given for Guam and the U.S. Virgin Islands. I 
simply want Members of Congress and the White House and Treasury 
Department officials to understand the implications for any tax cut 
proposal on the operations of the Government of Guam and the impact to 
our communities, and I hope that we can work something out.

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