Dear Source:
With regard to the article by Bernetia Akin titled "V.I. could lose $28.6M in Bush tax plan," if $28.6 million will be "lost," where will it go?
The story reports that "when Gov. Charles Turnbull submitted his 2001 budget proposal, he estimated individual income tax collections for this year at $205.2 million. The Bush plan would lower that amount by $28.6 million, according to calculations made by the V.I. Bureau of Internal Revenue."
The IRB derives the $28.6 million figure by applying the old rates and then the new, proposed rates to the projected payroll figures and subtracts one projection from the other. That "static" method assumes that the change in tax policy will have no effect on economic activites related to investment and employment. That assumption is surely false.
Even granting that the assumption is true, and that tax revenues fall by $28.6 million, the money is not "lost." It remains in the pockets of the working people of the Virgin Islands, instead of being tranferred to the government's general fund or other accounts.
Is there any particular reason why that $28.6 million would not be a "bonanza" or a "windfall" for the "people" of the Virgin Islands – a "gain" rather than a "loss"?
Steven Santora
St. Thomas
