Representatives vote to place EITC bill on calendar for action

The House of Representatives voted yesterday to withdraw from the Committee on Ways and Means and place on calendar for action at their next session a bill that Rep. Christina Marie E. Sablan (D-Saipan) introduced that would repeal a law in order to make working families eligible for the Earned Income Tax Credit.

At the session, Sablan said the American Rescue Plan Act that President Joseph Biden Jr. just signed last Friday fully and permanently fund the EITC for the CNMI and other territories. Sablan said the Department of Finance estimates the value of that EITC at approximately $25 million based on 2019 data. She said the next step for the Legislature is to repeal a local CNMI law that imposes a 100% tax on income tax credit for working families.

“I’d like to urge for your support…to make sure that we remove that barrier for our people to receive the EITC and to make sure that these funds are delivered as quickly as possible,” she said.

Sablan said this is money that will go right back into the local economy—like its own kind of stimulus.

Cosponsored by several other lawmakers, Sablan’s H.B. 22-19 would restore the EITC for low-and moderate-income families in the CNMI.

The EITC is a refundable tax credit in the U.S. Internal Revenue Service Code that helps qualified low- to moderate-income working families and taxpayers get a tax break by allowing them to use the credit to reduce the taxes they owe, and in some cases, increase their tax refunds.

The legislation will repeal Title 4 Section 1709 of the Commonwealth Code, which currently provides that a taxpayer who is owed a tax refund due to “any excessive credit” must pay an additional tax to the Commonwealth that is equal to 100% of the refund.

Sablan said since the enactment of Public Law 11-25 in 1998, low-and middle-income earners of the CNMI have been burdened by this 100% tax on refunds for which they would have otherwise qualified.

Floor leader Rep. Ralph N. Yumul (R-Saipan) moved to withdraw Sablan’s House Bill 22-19 from the Committee on Ways and Means and place it on the calendar.

Sablan pointed out that, as soon as the American Rescue Plan Act was enacted into law, over half a billion dollars became available for EITC and of that amount, $25 million is available to fully and permanently fund EITC here in the Marianas.

“And for us to make these funds available to our people to qualify struggling working taxpayers and families, we have to repeal the section of the law that slaps a 100% tax on the EITC,” she said. Otherwise, those funds will not get to the people, she added.

Now that the funding is available, the money should be transferred to the CNMI government in short order, she said.

Sablan said there will be time for all lawmakers to review the American Rescue Plan Act, particularly as it pertains to the EITC. “It’s very straightforward. It’s 100% permanent funding for the EITC. But we have to do our part…and restore the EITC in our own law before these funds can be available. So that is the urgency,” she said.

The American Rescue Plan Act is a $1.9-trillion stimulus package for the American people, and all U.S. territories, including the Marianas.

Sablan said she would be more than happy to share with lawmakers excerpts of the Act that makes it very clear that this is 100% and it’s permanent. “I will share that with you. I just got it myself a few days ago,”

Committee on Ways and Means chair Rep. Donald M. Manglona (Ind-Rota) said that, based on the information that Sablan has shared, it’s the understanding of his committee that they do have the necessary information to act on this legislation. “Again, time is of the essence,” Manglona said. “And we’re just trying to get the money out to the people in need.”

Manglona said Sablan did share that she will disseminate that information to the rest of the House members who have not seen that yet.

The House members then unanimously voted to withdraw the bill from the committee and place it on the calendar for action at the next session.