Rep. Barney Frank has been defending himself against criticism for accepting a winter private jet ride to the U.S. Virgin Islands from money manager Donald Sussman on the grounds that, as Mr. Frank puts it, "I voted to raise his taxes."
The truth of the matter, though, is that Mr. Frank joined with his Democratic colleague, Rep. Charles Rangel, in backing a provision widely seen as a favor to those, like Mr. Sussman, who participated in a Virgin Islands economic development program that allowed him to avoid 90% of the federal income tax that he would have otherwise owed.
Mr. Frank can't claim ignorance. The New York Times reported on November 8, 2007: "The chairman of the House Ways and Means Committee has proposed legislation that would effectively halt some current tax audits of people who get a tax break for living and operating a business in the United States Virgin Islands....The provision is in a broader tax relief bill intended to prevent some 21 million American households from falling subject to the alternative minimum tax this year. That broader bill was approved by Mr. Rangel's committee last week."
The Washington Post had also run an article, on November 7, 2007, under the headline, "Bill Would Limit IRS's Reach in Virgin Islands." That article began, "A tax provision making its way through the House of Representatives would close down IRS audits on hundreds of wealthy Americans who live part of the year in the U.S. Virgin Islands and avoid the higher income taxes paid by mainlanders."
The legislation was House Resolution 3966, the Temporary Tax Relief Act of 2007. Section 503 was headlined, "Clarification of entitlement of Virgin Islands residents to protections of limitations on assessment and collection of tax."
On November 9, 2007, the bill passed the House by a vote of 216 to 193. Among the yeas was Barney Frank. Mr. Frank has claimed he did not even know Mr. Sussman at that point. But he did know Mr. Rangel, who has been the point man for Congressional Democrats on the Virgin Islands tax break issue.
"Clarification of entitlement" is an unintentionally apt phrase in this case, because it is Mr. Frank's sense of entitlement, and Mr. Sussman's, that seem to deserve each other. Mr. Frank seems to think he and his domestic partner are entitled to benefit from private jet rides from those who benefited from special tax breaks. Mr. Sussman seems to think that he was entitled to save the money – perhaps millions of dollars — in taxes that he would have had to pay had he not been a Virgin Islands resident. "I follow the rules. I do what I'm supposed to do," he told the New York Times.
The best clarification of the situation would be one that comes from the voters of Massachusetts, who have a choice to make next month on whether to return Mr. Frank to Washington or whether instead to give him more time to jet-set in the Caribbean.
