Governor Lou Leon Guerrero has written letters to President Trump and key members of Congress, urging their support for passage of legislation that would authorize reimbursement of Earned Income Tax Credit (EITC) for Guam.
“Nearly three-quarters of a billion dollars has been paid in EITC since fiscal year 2000. That’s nearly $750 million that could have been used to prioritize public education, healthcare, and safety initiatives for our people,” the governor stated in her letter. “And while our government has tried for decades to seek EITC reimbursement through various means, we now have a distinct opportunity to finally see resolution through the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act.”
Section 20125(b) of H.R. 6800, or the HEROES Act, proposes a 75% reimbursement of the cost of EITC to U.S. possessions with mirror code tax systems, such as Guam.
In her letter to President Trump, the governor requested full reimbursement of EITC and reminded him of the conversation the two had at the White House last year.
“Mr. President, it is obvious that you would do better than what Congress has proposed in the HEROES Act for Guam. A 100% reimbursement of the cost of EITC to Guam is much better—something for which you previously have expressed your support directly to me at the White House. I am humbly requesting for your swift action and support for this in the next stimulus package,” the governor urged.
The governor also wrote letters to Senators Elizabeth Warren, D-MA; Bernie Sanders, D-VT, member of the Committees on Energy and Natural Resources and Health Education, Labor and Pensions; and Lisa Murkowski, R-AK, Chairwoman of the Committee on Energy and Natural Resources.
In her letters, the governor made similar requests for support of EITC reimbursement through passage of the HEROES Act.
“As you are aware, Section 1421i of the Organic Act of Guam mandates the government of Guam mirror the Internal Revenue Code and establishes such mirror status as the Guam Territorial Income Tax. As such, the EITC is a mandate to be paid by the government of Guam and is not reimbursed by the federal government,” the governor said.
She added that in 2018, Guam paid out nearly $57 million in EITC, which has historically increased year-over-year, from $6.1 million in FY 2000, to $22.7 million in FY 2005, to $43.9 million in FY 2010.
“During these unprecedented times, a provision to reimburse EITC payments would serve to augment the government of Guam’s revenue base given the impacts the 2019 Novel Coronavirus (COVID-19) has had on Guam’s economy,” the governor said.
In a separate letter to Guam Congressman Michael San Nicolas, the governor urged him to stay focused on the pursuit of funding EITC for Guam. The governor also requested an update on the status of this issue by August 3, 2020.
“Many of our local programs, such as health, education, and public safety, are affected because EITC costs must be paid within six months of the close of income tax return filing deadlines. In 2018, Guam’s EITC payouts were nearly $57 million. To ensure this program remains sustainable, we both can agree that ‘Congress must see to it that the federal government absorbs the cost of EITC by permanently funding it on a reimbursement basis in the territories,’” the governor wrote.
While states are reimbursed by the federal government for EITC payments, the governor pointed out that EITC remains an unfunded mandate for Guam.
In her letter to San Nicolas, the governor reiterated that a fortuitous opportunity exists through the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which would substantially increase EITC.
The HEROES Act increases the maximum credit for childless filers from $538 to $1,487—a 275% increase. Additionally, the legislation would increase the generosity of the credit’s refundability as filers earn income.
“As you stated in your testimony to the US Senate Committee on Energy and Natural Resources, ‘for Guam in particular, the pre-existing conditions of unfunded EITC mandates, the lack of Supplemental Security Income (SSI) applicability, and the underfunded costs of the migratory impacts in the Compacts of Free Association (COFA) left us vulnerable and stall our efforts to recover,’” the Governor wrote.
“As Governor, I ask that you aggressively pursue through legislation or through support of the HEROES Act, Section 20121 regarding the Federal funding of EITC. As our delegate, I know you will use your time in office to advocate for the good of our people,” she added.