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Palacios: Ending tax on earned income tax credit worth a look
Senate President Arnold I. Palacios (R-Saipan) said yesterday that ending taxes on earned income tax credit for higher tax returns toward Marianas taxpayers is worth looking into.
In an interview, Palacios said that Delegate Gregorio Kilili C. Sablan’s (Ind-MP) suggestion to end the tax on earned income tax credit should be further studied if to be repealed entirely.
“It certainly is something to look at if it is a nexus to increasing employment opportunities and incentivize residents to seek jobs,” said Palacios, adding that it was a “valid proposal.”
“We just got to see…what the impact is financially,” he said, adding that the cost of it in the past was what urged the 11th Legislature to act on what is now known as Public Law 11-25, the law that imposes a 100-percent tax on any of the credit that could be refunded.
“I’m for it in general. We just got to figure out the impact cost particularly,” he said.
House Speaker Rafael Demapan (R-Saipan) did not immediately respond to Saipan Tribune’s request for comment.
Sablan over the weekend sent a letter to both presiding officers of the 20th CNMI Legislature, requesting that they end the tax on earned income tax credit.
“The estimate is $16 million would be refunded to taxpayers each year, if the Legislature repealed [P.L. 11-25],” Sablan said in a statement. He added that P.L. 11-25 was not entirely legal, according to section 601 of the Marianas Covenant of the Political Union with the United States.
Being part of the federal system, the earned income tax credit is also covered under section 601, which states that the federal tax system would be applied in the Marianas as well. Sablan pointed out, however, the legality of P.L. 11-25 was not the issue.
Reinstatement of the earned income tax credit would do much to bring U.S. workers off the sidelines and into jobs in the Marianas,” he said, adding that it could be tied into his H.R. 4869, or his legislation that extends the transitional period for the foreign worker program in the CNMI.
