The Barnes 8, Resolution 56 and the IRS
Vice Speaker Tina Muna Barnes and seven senators, Frank Blas Jr., Sabina Perez, Clynt Ridgell, Joe San Agustin, Amanda Shelton, José Terlaje and Mary Torres — “The Barnes 8” — recently participated in an effort that could result in all of us paying income tax to the IRS instead of GovGuam if they are successful.
Per The Barnes 8’s effort, rather than flow into the Treasury of Guam as they do now, your income taxes would go to the U.S. Treasury. They would do away with Section 30 funds, too. Section 30 of our Organic Act requires the feds to cover over into the Treasury of Guam the federal income taxes paid by military members stationed here.
Under the current setup, we pay the Guam territorial income tax, which is the “mirror image” of federal income tax. But the money we pay, plus the Section 30 funds, stay here.
Without the mirror tax and Section 30, Guam would be a markedly different place. Either extremely high local taxes or a dramatically scaled-down GovGuam would be the inevitable result.
The Barnes 8 collaborated on the passage of Resolution 56-36. They communicated with a member of Congress, who wants the U.S. Supreme Court to overrule Downes v. Bidwell, a U.S. Supreme Court case decided in 1901, which many refer to as the Insular Cases.
The Barnes 8 played the race card.
Excerpts from Resolution 56-36 read: “Whereas, specifically in the judgment of Downes v. Bidwell, Justice Henry Billings Brown, stated that the territories were ‘inhabited by alien races, differing from us in religion, customs … and modes of thought,’ thus making the people of Guam impossible to govern ‘according to Anglo-Saxon principles.’”
Quotation marks indicate the actual text from Downes while the rest of the “whereas” clause she authored is a product of her own creativity.
The language from that “whereas” clause is what lawyers call obiter dictum, or a justice's incidental expression of opinion, not essential to the decision and not establishing precedent. It is not the “judgment” of the court. Because the dictum is stated hypothetically, Barnes’ rendition of it is completely out of context.
A review of Downes shows that Barnes butchered the actual text of the ruling to reach the “racist” result upon which she grounded her resolution. The actual Downes language isn’t a judgment and doesn’t refer to the people living on Guam.
Here’s the actual holding or judgment from Downes: “We are therefore of opinion that the island of Porto Rico is a territory appurtenant and belonging to the United States, but not a part of the United States within the revenue clauses of the Constitution; that the Foraker Act is constitutional, so far as it imposes duties upon imports from such island, and that the plaintiff cannot recover back the duties exacted in this case.”
And here are those revenue clauses at Art. I § 8 ¶ 1 of the Constitution:
“The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States.”
Because of the holding in Downes, our income tax doesn’t have to be uniform with the 50 states. Because of that holding, we have our own territorial income tax and we keep what you pay instead of sending it to Washington. And you can add in the section 30 money to that also.
The Barnes 8 were successful in getting Resolution 56-36 through our legislature and sent it off to the U.S. Congress. Let’s hope that that’s the end of it. If Downes were overruled, the revenue clauses would apply and our tax would have to be uniform with the 50 states.
The 1901 U.S. Supreme Court case, Downes v Bidwell saves us from the IRS. Let’s hope that The Barnes 8 don’t succeed in their quest to get Downes overruled.
Other advantages accrue to us per the Insular Cases, i.e. Downes v. Bidwell, that we will explore next month.
Bob Klitzkie is a former senator and Superior Court of Guam judge pro tem. He hosts a talk show, called “Tall Tales,” on KUSG-FM (93.3 FM) weekday afternoons from 4 to 6 p.m.