April 28, 2008 — The Virgin Islands government will soon receive $41.5 million from the U.S. Treasury to give $600 checks to most of the territory's taxpayers.
Congress passed a $150 billion dollar economic stimulus package earlier in the year calling for cash rebates to every taxpayer, with the goal of jump starting the economy with a rush of consumer spending. Those with direct deposit of their taxes began getting money in their accounts Monday. But the rebates put the Virgin Islands and other territories with tax systems tied to the federal rates in a bind. Because the territory collects income taxes locally at the rates set for federal income tax, the rebate checks would have come directly out of the V.I. government till, putting the budget $41.5 million in the hole.
Christensen and her fellow delegates from the U.S. territories successfully lobbied to amend the Economic Stimulus Act of 2008 to reimburse the territories which would have had to shoulder the cost of the rebates as an unfunded mandate.
“We were determined to protect the insular treasuries from loss and I am pleased that the Bush administration is providing this advance payment,” Christensen said. “I am even more pleased that our residents will be receiving their checks in the mail at this time of rising gas and food prices.”
The stimulus is expected to provide $600 to individuals who make up to $75,000 annually, $1,200 per married couple who make up to $150,000 and $300 per dependent child. Low wage workers who earned at least $3,000 in 2007 will get at least $300.
The U.S. Senate also added provisions that would give $300 for seniors living on Social Security and disabled veterans. In a press release from her office Monday, Christensen said low income residents and seniors who usually do not file income tax returns can still get a $300 stimulus payment by filing before Oct. 15.
“They should contact the Virgin Islands Bureau of Internal Revenue for assistance,” she said.
Christensen added that the Congress is planning a second stimulus bill in the near future focusing on increasing energy provisions that assist low income residents, funds for a summer jobs program, increasing food stamps and other provisions to assist Americans suffering in this faltering economy.
These individual tax rebates are one horn of the federal stimulus package. The other is a generous one-time 50 percent depreciation write-off on investments made during this year. This encourages businesses thinking of major capital investments to do it now, rather than later.
"It accelerates into the current year some tax savings in exchange for not getting the deduction in later years," said tax expert Neil D. Kossler during a telephone interview Monday. . "Over time, it is revenue neutral, except if I can have a dollar now in exchange for a dollar next year, I'll take the dollar now every time." Kossler is a D.C. metropolitan area certified public accountant who has appeared on CNN as a tax expert.
Small businesses will benefit from the stimulus because they can write off taxes for capital investments made in 2008 up to $250,000 and for purchases of new equipment up to $800,000.
Another provision helps homeowners affected by the mortgage crisis. It increases Federal Housing Administration loan limits for single family loans from $417,000 to $729,000 for one year for loans made between July 31, 2007 and December 31, 2008.
"This will help some home owners go from a variable rate to a fixed rate mortgage," said Brian Modeste, Christensen's legislative director, during a phone interview Monday.
The $41.5 million should be disbursed to the territory around April 30 and the checks will then be distributed to V.I. taxpayers by the V.I. Internal Revenue Bureau, Christensen's spokeswoman Monique C. Watson said on Monday.
Editor's note: Neil D. Kossler is the brother of Source reporter Bill Kossler.
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