GUAM CONGRESSIONAL DELEGATE SAYS TERRITORY SHOULD CONSIDER 'DE-LINKING' FROM U.S. TAX CODE

Letter to the Pacific Daily News by Madeleine Z. Bordallo

Guam Delegate to the U.S. House of Representatives

The Trump tax law enacted last year dealt a devastating blow to GovGuam’s revenues and caused our island’s current deep budgetary challenges. This law was crafted in Washington, D.C., without any input from the territories or rank-and-file Congressional Republicans or Democrats.

The consequences of the Trump tax law now require the Legislature and governor to address GovGuam’s budget shortfall. The impacts are significant and will affect thousands of GovGuam employees, local businesses and working families who rely on critical government services every day..

Making up for GovGuam’s budgetary shortfall is not an easy task. While reversing the Trump tax law is not possible in the current political environment, I am working hard to boost federal investment in Guam, provide parity for the U.S. territories in federal grant programs and develop new industries that will expand our island’s economy.

As we work to resolve GovGuam’s immediate budgetary crisis, our local leaders should re-examine our need to mirror a complex federal tax system intended for the United States as a whole, not specific to the needs or realties of our island. Guam currently mirrors the federal tax code, which requires our local government to adopt mandates enacted by the president and Congress and prevents local leaders from making meaningful changes to GovGuam’s ability to set tax rates and raise new revenue.

Developing a Guam tax code would allow our elected leaders to design a system that more accurately reflects the needs of our community. This cannot be accomplished in time to address our immediate budgetary crisis or provide an easy out for the tough choices that our Legislature and Governor must make this year. But in the long term, it would mean that GovGuam would have greater autonomy to generate revenues for local public services, assist needy families, and promote economic development.

Ultimately, it would put Guam on an equal footing with the 50 states and other municipalities that do not rely on the federal government to dictate how their local governments generate income and corporate tax revenues.

Since 1986, federal law has authorized the Legislature and governor to delink from the federal Internal Revenue Code, and I am encouraged that the Guam Tax Commission is reviewing this option.

Now is the time to seriously re-evaluate whether de-linking is ultimately good for our island’s long-term interests. This process will take time and will require engagement from our entire community. But we cannot let the complexities deter us from meaningfully considering this option. Any new tax code developed for Guam will also need to improve tax collection and enforcement, to ensure fairness and accountability.

As your voice in Congress, I am committed to working with our local leaders and providing technical assistance from federal agencies and tax writers to advance this discussion. By working together, I am confident that we will overcome the impacts of the Trump tax law and develop a stronger, more self-reliant Guam for future generations.