[House Report 107-417]
[From the U.S. Government Publishing Office]
107th Congress Rept. 107-417
HOUSE OF REPRESENTATIVES
2d Session Part 1
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CLARIFICATION OF TAX TREATMENT OF BONDS AND OTHER OBLIGATIONS ISSUED BY
GOVERNMENT OF AMERICAN SAMOA
_______
April 23, 2002.--Ordered to be printed
_______
Mr. Hansen, from the Committee on Resources, submitted the following
R E P O R T
[To accompany H.R. 1448]
[Including cost estimate of the Congressional Budget Office]
The Committee on Resources, to whom was referred the bill
(H.R. 1448) to clarify the tax treatment of bonds and other
obligations issued by the Government of American Samoa, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. CLARIFICATION OF TAX TREATMENT OF BONDS AND OTHER
OBLIGATIONS ISSUED BY GOVERNMENT OF AMERICAN SAMOA.
(a) Exemption of All Bonds from Income Taxation by State and Local
Governments.--Subsection (b) of section 202 of Public Law 98-454 (48
U.S.C. 1670) is amended to read as follows:
``(b) Exemption of All Bonds from Income Taxation by State and
Local Governments.--
``(1) In general.--The interest on any bond or other
obligation issued by or on behalf of the Government of American
Samoa shall be exempt from taxation by the Government of
American Samoa and the governments of any of the several
States, the District of Columbia, any territory or possession
of the United States, and any subdivision thereof.
``(2) Exemption applicable only to income taxes.--The
exemption provided by paragraph (1) shall not apply to gift,
estate, inheritance, legacy, succession, or other wealth
transfer taxes.''.
(b) Effective Date.--This Act shall apply to obligations issued
after the date of the enactment of this Act.
Purpose of the Bill
The purpose of H.R. 1448 is to clarify the tax treatment of
bonds and other obligations issued by the Government of
American Samoa.
Background and Need for Legislation
Under U.S. law, Congress has expressly provided for the
exemption of state and local taxes for bonds issued by Guam,
the Virgin Islands, Puerto Rico and the Northern Mariana
Islands. While American Samoa can issue bonds similar to the
other territories, the interest earned from American Samoan
bonds is subject to taxation by the several States, Washington,
D.C. and the other territories. H.R. 1448 will provide parity
for American Samoa. This legislation amends U.S. law to allow
interest earned on bonds issued by the American Samoan
Government to be exempt from state, local and territorial
taxation. This will make American Samoa bonds more attractive
to investors and could provide additional sources of funds for
the government of American Samoa.
Committee Action
H.R. 1448 was introduced on April 4, 2001, by Delegate Eni
F.H. Faleomavaega (D-AS). The bill was referred to the
Committee on Ways and Means, and additionally to the Committees
on Resources and the Judiciary. On September 6, 2001, the bill
was rereferred to the Committee on Resources, and additionally
to the Committee on the Judiciary. On March 20, 2002, the
Resources Committee met to consider the bill. Mr. Faleomavaega
offered an amendment in the nature of a substitute that struck
section 1 (a) and (c) to correct a drafting error in the
original bill. It was adopted by voice vote. The bill as
amended was then ordered favorably reported to the House of
Representatives by voice vote.
Committee Oversight Findings and Recommendations
Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of
rule XIII of the Rules of the House of Representatives, the
Committee on Resources' oversight findings and recommendations
are reflected in the body of this report.
Constitutional Authority Statement
Article I, section 8 and Article IV, section 3 of the
Constitution of the United States grants Congress the authority
to enact this bill.
Compliance With House Rule XIII
1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the
Rules of the House of Representatives requires an estimate and
a comparison by the Committee of the costs which would be
incurred in carrying out this bill. However, clause 3(d)(3)(B)
of that rule provides that this requirement does not apply when
the Committee has included in its report a timely submitted
cost estimate of the bill prepared by the Director of the
Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974.
2. Congressional Budget Act. As required by clause 3(c)(2)
of rule XIII of the Rules of the House of Representatives and
section 308(a) of the Congressional Budget Act of 1974, this
bill does not contain any new budget authority, spending
authority, credit authority, or an increase or decrease in
revenues or tax expenditures.
3. General Performance Goals and Objectives. This bill does
not authorize funding and therefore, clause 3(c)(4) of rule
XIII of the Rules of the House of Representatives does not
apply.
4. Congressional Budget Office Cost Estimate. Under clause
3(c)(3) of rule XIII of the Rules of the House of
Representatives and section 403 of the Congressional Budget Act
of 1974, the Committee has received the following cost estimate
for this bill from the Director of the Congressional Budget
Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 5, 2002.
Hon. James V. Hansen,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1448, a bill to
clarify the tax treatment of bonds and other obligations issued
by the government of American Samoa.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Matthew
Pickford (for federal costs); and Marjorie Miller (for the
state and local impact).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
H.R. 1448--A bill to clarify the tax treatment of bonds and other
obligations issued by the government of American Samoa
H.R. 1448 would amend current law to make bonds issued by
the government of American Samoa exempt from state, local, and
territorial income tax. The bill would not affect federal
taxes, and CBO estimates that implementing H.R. 1448 would have
no impact on the federal budget. Because the bill would not
affect direct spending or governmental receipts, pay-as-you-go
procedures would not apply. The bill contains no private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
H.R. 1448 contains an intergovernmental mandate as defined
in UMRA, but CBO estimates that the cost of the mandate would
be well below the threshold established in that act ($58
million in 2002, adjusted annually for inflation). This mandate
is a preemption of state and local taxing authority. The bill
would exempt the interest on any bond issued by the government
of American Samoa from state, local, and territorial taxes.
Because American Samoa generally has only a few million dollars
in bonds outstanding at any time, this preemption would not
have a significant cost for state, local, or territorial
governments. Enacting this bill would benefit the government of
American Samoa by reducing its borrowing costs.
The CBO staff contacts for this estimate are Matthew
Pickford (for federal costs), and Marjorie Miller (for the
state and local impact). This estimate was approved by Peter H.
Fontaine, Deputy Assistant Director for Budget Analysis.
Compliance With Public Law 104-4
This bill contains no unfunded mandates as defined by
Public Law 104-4.
Preemption of State, Local or Tribal Law
This bill will preempt State or local law regarding the
taxation of bonds issued by American Samoa. It will not affect
tribal law.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SECTION 202 OF THE ACT OF OCTOBER 5, 1984
(Public Law 98-454)
AN ACT To enhance the economic development of Guam, the Virgin Islands,
American Samoa, the Northern Mariana Islands, and for other purposes.
Sec. 202. (a) * * *
[(b)(1) Except as provided in paragraph (2), any obligation
shall be exempt from all State and local taxation in effect on
or after October 1, 1984.
[(2) Any obligation issued under subsection (a) shall not
be exempt from State or local gift, estate, inheritance,
legacy, succession, or other wealth transfer taxes.
[(3) For purposes of this subsection--
[(A) The term ``State'' includes the District of
Columbia.
[(B) The taxes imposed by counties, municipalities,
or any territory, dependency, or possession of the
United States shall be treated as local taxes.]
(b) Exemption of All Bonds from Income Taxation by State
and Local Governments.--
(1) In general.--The interest on any bond or other
obligation issued by or on behalf of the Government of
American Samoa shall be exempt from taxation by the
Government of American Samoa and the governments of any
of the several States, the District of Columbia, any
territory or possession of the United States, and any
subdivision thereof.
(2) Exemption applicable only to income taxes.--The
exemption provided by paragraph (1) shall not apply to
gift, estate, inheritance, legacy, succession, or other
wealth transfer taxes.
* * * * * * *