To extend the possession tax credit with respect to American Samoa an additional 10 years.

February 8, 2005

Mr. FALEOMAVAEGA introduced the following bill; which was referred to the Committee on Ways and Means

To extend the possession tax credit with respect to American Samoa an additional 10 years.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `American Samoa Possession Tax Credit Act of 2005'.

SEC. 2. FINDINGS.

Congress finds the following:

(1) The United States territory of American Samoa lies 2,300 miles southwest of Hawaii, covers a land area of 76 square miles, has a population of less than 60,000, and a per capita income of $4,300 per year.

(2) Due to scarcity of land, labor, and capital, economic growth and development in American Samoa has been limited.

(3) In fact, more than 80 percent of American Samoa's economy is dependent either directly or indirectly on two United States tuna canneries which employ more than 5,150 people or 74 percent of the workforce.

(4) A decrease in production or departure of one or both of the two canneries in American Samoa could devastate the local economy resulting in massive layoffs and insurmountable financial difficulties.

(5) Although wage rates are $0.60 and less per hour in other tuna catching nations and $3.60 per hour in American Samoa, the possession tax credit offered by section 936 of the Internal Revenue Code of 1986 has encouraged both canneries to remain and invest in the Territory.

(6) Such credit is scheduled to expire at the end of 2005 and this may likely lead to the departure of one or both canneries.

(7) To protect American Samoa's present economy and to encourage and foster other investment and development in the Territory, it is necessary to make permanent or extend the possession tax credit with respect to American Samoa an additional ten years.

SEC. 3. EXTENSION OF POSSESSION TAX CREDIT WITH RESPECT TO AMERICAN SAMOA.

(a) In General- Subparagraph (A) of section 936(j)(8) of the Internal Revenue Code of 1986 (relating to special rules for certain possessions) is amended by inserting before the period at the end the following: `(January 1, 2016, in the case of American Samoa)'.

(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after December 31, 2005.

END