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VIEDA Holds Public Hearing, Governing Board Decision Meeting

The V.I. Economic Development Authority will hold a hearing for the Economic Development Commission (EDC) at 9 a.m. on Friday,…

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Half a dozen young people, local artists and music producers have created a peace song for Carnival 2014. To read more about the song, click here.
 

 
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V.I. Next Generation Network CEO Clarifies Misconceptions

V.I. Next Generation Network CEO Lawrence Kupfer dispels public misconceptions about the company while talking to Rotary Sunrise members Tuesday.

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2014-07-23 00:20:44
V.I. Major Little League Team Loses to Bahamas in Regional Championship

The Bahamas host team from Grand Bahama defeated the Virgin Islands Major Little League squad, 3-2, on Tuesday in the 2014 Latin American Regional Major Little League tournament in Freeport.

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2014-07-22 23:59:50
Education Releases Final 2014-2015 School Calendar

Gov. John P. deJongh Jr. signed the 2014-2015 school calendar on Tuesday, July 22, and it was officially released by the Department of Education. According to the calendar, opening and closing dates for school are Sept. 2, 2014 and June 19, 2015.

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2014-07-22 21:48:12
Op-ed — St. Croix
HOW ABOUT A NEGATIVE ESTATE TAX FOR THE USVI?

Maybe the U. S. Virgin Islands should offer wealthy older people a remarkable deal -- live in the USVI and file your estate tax here and the island government will give your heirs a 2% rebate on their federal estate tax.
You leave an estate of, say, of two-three million dollars, the federal tax comes to say $500,000 and your heirs would get back $10,000 from the island government. (These numbers are approximations, but you get the idea.)
This is attractive for three reasons:
● such a scheme would encourage more wealthy people to settle in the USVI;
● it would not raise taxes for the estate, or any other Virgin Islands interest group;

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● and it would bring additional money, maybe millions a year, to the sore-pressed island treasury.
Sound too good to be true? It is not, it would simply take a little imagination on the part of the legislature; the proposed inheritance tax is in keeping with federal law.
Most of the 50 states, but few of the island territories, have taken advantage of an obscure part of the federal code. If a state or territory wants to impose an estate tax on local estates it can do so without increasing costs to the estate. If the state or territory passes the right kind of estate tax, a share of the federal estate tax comes to the jurisdiction. So it is the U.S. Treasury, not the estate, that provides the money.
Strange but true. States passing what are called Credit Estate Tax laws can levy up to 16% on the value of estates and have the taxes so levied deducted dollar for dollar from the Federal Estate Tax.
I do not have hard information on what the local results would be, but in a year in which some wealthy people died it should bring millions to the island government.
The new, and I think, unexplored angle is the suggested estate tax rebate, which could be used to encourage more well-to-do mainlanders to settle in the islands. The notion is a simple one -- the Virgin Islands would take a small part of the windfall that it would collect by passing the Credit Estate Tax, and return it to the heirs of substantial estates. The USVI Treasury would not be out-of-pocket, as it would be rebating money collected from the new islands estate tax, and it would create an interesting, new pitch that the islands could use to lure more well-to-do mainlanders to spend their golden years in the islands.
But might the U.S. Treasury object, and seek to change the law to prevent the proposed negative estate tax?
Well, maybe, but let me tell a little story about how the Treasury reacted to a somewhat similar maneuver a few years ago in the Commonwealth of the Northern Mariana Islands (CNMI), another American island jurisdiction out in the Pacific. The local government discovered, after his death, that a colorful and wildly successful mainlander, CNMI resident Larry Hillbloom (the "H" in DHL), had left an estate worth about half a billion dollars. They also noticed that they would not get a nickel from the estate taxes, because the CNMI had not passed a Credit Estate Tax; so the legislature passed one retroactively, and picked up several million dollars as a result. The U.S. Treasury knew what was happening, but did not think it worthwhile to sue the CNMI over the matter.
So, the chances are that the U.S. Treasury would not bother itself to object to the proposed negative estate tax in the USVI, even if it had grounds to do so, which I doubt (but then I am not a tax lawyer).
As a matter of fact, the USVI could copy what the CNMI did, and pass a Credit Estate Tax Law retroactively, and hope to gain some additional taxes in this way -- again, not from taxpayers, but from the feds.
So I am suggesting three estate tax alternatives: 1. simply pass an Estate Credit Tax bill prospectively, and get money from a new source; 2. pass such a bill, and add the 2% rebate offer; and/or 3, pass such a bill and make it retroactive.
In addition to exploring one-off fiscal maneuvers (like trying to borrow its way out of debt, and working out exotic tax arrangements with publishers and athletes) the USVI government might also focus on run-of-the-mill but solid ways of increasing its tax revenues on a sustaining basis, such as the additional rum taxes provided by the Clinton Administration, and one of the estate tax programs described above.

Editor's note: David North, a former assistant to the U.S. Secretary of Labor, is chairman of the Board of Tax Appeals in Arlington County, Virginia.

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