Bill Overview
Title: Territorial Tax Parity and Clarification Act
Description: This bill modifies the income source rules that apply with respect to the taxation of capital gains from certain personal property sales in the U.S. Virgin Islands (USVI). Specifically, the bill requires capital gains income earned by a USVI resident to be considered USVI source income regardless of the tax rate imposed by the USVI government. (Under current law, a similar rule applies to other U.S. territories, including Guam, American Samoa, the Northern Mariana Islands, and Puerto Rico.)
Sponsors: Del. Plaskett, Stacey E. [D-VI-At Large]
Target Audience
Population: USVI residents with capital gains income
Estimated Size: 87000
- The bill specifically addresses USVI residents, indicating its primary target population.
- The legislation impacts how capital gains for specific personal property sales are taxed, potentially affecting individual and household finances directly through tax liabilities.
- Presently, the bill extends rules already applied to other U.S. territories, including Guam, American Samoa, the Northern Mariana Islands, and Puerto Rico, to the USVI.
- It presumes all USVI residents who have capital gains income might be affected.
Reasoning
- This policy specifically impacts USVI residents with capital gains income, estimated at a smaller number than the entire USVI population (87,000).
- The distribution of impacts will likely be concentrated among wealthier individuals who have significant capital gains earnings.
- Some USVI residents may not be affected at all if they do not engage in transactions that result in capital gains, thus providing a wide spectrum of opinions and reactions.
- For many, this policy will primarily affect their financial planning and tax computations, potentially influencing their self-reported wellbeing in years when capital gains are realized.
- It's essential to consider the socio-economic diversity within the USVI; not all residents have the same access to income-generating assets subject to capital gains.
- The policy has limited budget for its initial stages and aims to create parity in territorial taxation, potentially enhancing fairness perceptions among those affected.
Simulated Interviews
Financial Advisor (USVI)
Age: 45 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- This policy makes the tax situation much clearer for me and my clients.
- I think this parity across territories is fair and removes confusion for us who deal with the mainland.
- I expect it might change some of our investment strategies minimally but nothing too disruptive.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 10 |
Retired Engineer (USVI)
Age: 60 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- It seems like a sensible move. As retirees, we already have tax complexities, so anything that simplifies things is appreciated.
- I'm cautiously optimistic this will ease my tax filings in coming years.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Real Estate Developer (USVI)
Age: 52 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 20.0 years
Commonness: 3/20
Statement of Opinion:
- For my business, this seems like a beneficial change. It'll help avoid dual taxation complexities.
- I hope it encourages more investments in the islands and brings capital.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 10 | 8 |
| Year 10 | 10 | 7 |
| Year 20 | 9 | 7 |
Teacher (USVI)
Age: 30 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 20/20
Statement of Opinion:
- The policy doesn't really affect me, as I don't have capital gains income.
- I don't think it changes much for everyday working people here.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Entrepreneur (USVI)
Age: 38 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 8/20
Statement of Opinion:
- This could be quite useful as every dollar saved is crucial for my business.
- Allows me to plan better without worrying about unexpected tax differences.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Freelancer (USVI)
Age: 29 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 15/20
Statement of Opinion:
- It's good to hear about policies, but doesn't impact my finances directly.
- Maybe it'll be more relevant if I start investing more.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Accountant (USVI)
Age: 50 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 7/20
Statement of Opinion:
- This alignment with other territories simplifies our work greatly.
- Should make it easier to provide consistent advice to all my clients.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Investor (USVI)
Age: 47 | Gender: female
Wellbeing Before Policy: 9
Duration of Impact: 20.0 years
Commonness: 4/20
Statement of Opinion:
- It should reduce some bureaucratic overhead, which is always welcome.
- Overall seems positive for personal finance management.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 10 | 8 |
| Year 10 | 10 | 8 |
| Year 20 | 9 | 8 |
Hospitality Worker (USVI)
Age: 36 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 18/20
Statement of Opinion:
- This change doesn't affect me directly, but if it boosts the local economy, that's good for everyone.
- I might look into investments if it makes things simpler.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Lawyer (USVI)
Age: 33 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- This will likely increase my workload intermittently, but it's good for our clients.
- Tax parity is always a good talking point for USVI and territorial residents.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Cost Estimates
Year 1: $8000000 (Low: $6000000, High: $10000000)
Year 2: $8000000 (Low: $6000000, High: $10000000)
Year 3: $8000000 (Low: $6000000, High: $10000000)
Year 5: $8000000 (Low: $6000000, High: $10000000)
Year 10: $8000000 (Low: $6000000, High: $10000000)
Year 100: $8000000 (Low: $6000000, High: $10000000)
Key Considerations
- The USVI residents will experience tax treatment similar to those in other U.S. territories, reducing disparities.
- Capital gains tax revenue shift to USVI may require renegotiation of federal funding to the territory.