March 3, 2006 — What the U.S. Congress does is of critical importance to the U.S. Virgin Islands. Issues Congress controls, and which have deeply affected the Virgin Islands in recent years, include the Economic Development Commission, the proposed chief financial officer, the rum rebate tax, and the cap on Medicaid payments.
Delegate Donna Christensen represents the Virgin Islands in Congress, but she has no vote. In other words, she does not have the bargaining power representatives from the states have.
Still, she works the corridors and testifies in committees and tries to get the voice of the Virgin Islands heard in Washington, D.C. Other V.I. officials, including the governor and the lieutenant governor, also go to Congress and try to get their voices heard at official and unofficial meetings.
Residents, although they don't have their own voting representative in Congress, have the right to try and influence congressmen who do vote.
The New York Sun reported Wednesday that the campaign to make the rules governing the EDC program more lenient includes "the registration of and payment of more than $100,000 to six lobbyists by the 'Virgin Islands Tax Working Group,' a cohort of private citizens attempting to persuade lawmakers to reopen the loophole provisions."
Governor Charles Turnbull mentioned in his State of the Territory speech a "reach out to a congressman" program that brought congressmen to the territory to learn about the EDC program.
Not much was made publicly of the meetings; they were mostly a combination of informal informational meetings followed by private dinner parties held and attended by business people in the community. No media members were notified beforehand of the meetings, nor is it known of any media member attending a meeting. The affairs were scheduled about every six weeks for much of 2005.
The trips were organized by Kevin Callwood, whose $200,000 contract is funded by the Public Finance Authority.
The congressmen apparently used the trips to the Virgin Islands also to raise money for their campaigns back home. According to Money in Politics Databases, at tray.com, five congressmen had a spike in contributions coming from the Virgin Islands on certain days last year. The site reports "V.I. donors have given $406,410 to candidates, PACs [Political Action Committees] and 527 committees during the 2006 election cycle."
The figures are broken down to $43,250 to federal House candidates and $235,350 to federal Senate candidates.
Senator Max Baucus, a Democrat from Montana, according to the Web site, earned the most contributions from Virgin Islanders. The site says he took in $66,500 from 52 donors. Baucus, a member of the joint tax committee, reportedly took the donations in on two dates last year – Oct. 31 and Dec. 1.
Senator Harold Gordon Smith, a Republican from Oregon, took in the second-largest amount with a total of $47,000 from 48 donors.
Michael D. Crapo received $39,000 from 27 donors in the Virgin Islands this cycle. The site reports this doubled what he received from residents of his own state this election cycle.
Crapo is also mentioned in the Sun article. It says, "Observers familiar with the efforts said the primary target is Sen. Crapo, a Republican of Idaho, whom Virgin Islanders hope will introduce an amendment to upcoming tax legislation allowing individuals to be considered USVI residents if they spend just three months out of every year there."
He is a member of the Finance Subcommittee: Taxation and IRS Oversight.
Senator James Matthes Talent, a Republican from Montana, received $38,600 from 30 donors with most of the money coming on Feb. 11 last year.
Senator Craig Thomas, a Republican from Wyoming, came in fifth place picking up $21,000 in contributions from Virgin Islanders, according to the Web site. Most of his donations were reported on June 7 of last year.
The biggest beneficiaries in the House from V.I. contributions are Frederik Stephen Upton, a Republican from Missouri and Gerald C. Willard, a Republican from Illinois.
The Sun, which takes credit for exposing what it calls a tax loophole for millionaires, followed up with another story on Thursday, this time addressed at Rep. Charles Rangel (N.Y.). The article said Rangel "is also one of the House's most "vigorous" advocates of restoring a tax loophole that allowed multimillionaires to evade up to 90 percent of their personal federal income taxes, according to representatives of the U.S. Virgin Islands, who lobbied Congress yesterday to reopen the loophole."
The article concludes, "Since 1998, 37 Virgin Islands taxpayers have ponied up a combined total of $38,700 for Mr. Rangel's re-election fund, according to Federal Election Commission filings."
The reports on tray.com only go back to the 2004 election and document Rangel only getting $4,000 from the Virgin Islands.
Rangel reportedly told the Sun that he has always had an interest in V.I. affairs and the donations, some of which came from fundraisers held in the Virgin Islands, had not inspired his activism on the EDC matter.
He said, according to the Sun, "I think it's really hypocritical for the people in the Virgin Islands and Puerto Rico to be treated as citizens only when it's time to go to war. And then when it's time to provide for their economy, and their healthcare system, to treat them worse than we treat the people of Baghdad. Whether or not you call it a colony, it's really not a full American status."
In fact, Rangel has been very open about his appearances in the Virgin Islands. The Source had a story about his 1999 visit. (See "Kennedy, Rangel Featured At Fund-Raiser").
He has also worked on other matters concerning the Virgin Islands. (See "Bill To Stop Tobacco Seizures Introduced").
Rangel took issue with the Sun's characterization of the EDC program being tax evasion. He is quoted as saying that the tax benefits program and tax evasion are "two separate things." Rangel told the Sun, "If you are evading taxes, you should be indicted. If you are avoiding taxes, that is legal."
It is unclear why the New York City-based Sun has taken up the issue of the Virgin Islands' EDC program. The New York Times did an article in September 2004 about the program, exposing some of the shortfalls, but knowledgeable sources said at the time the Treasury hammer dropped, the article had little or nothing to do with changes in the tax laws that have undermined the territory's tax benefits program. (See "V.I. Makes Front Page of The New York Times").
The Sun suggests that a 2003 front page article they did on two of the territory's wealthy EDC beneficiaries triggered the Treasury and Internal Revenue Service inquiry, but sources locally say that is folly.
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