The United States Virgin Islands—an idyllic Caribbean paradise of palm-fringed beaches, turquoise waters, and a vibrant culture steeped in history—exists in a purgatory of American colonialism. It is an overlooked contradiction: American, yet not quite; governed by the U.S., yet denied many of the rights and privileges that states take for granted.

While the mainland enjoys the fruits of economic prosperity, the Virgin Islands remain stuck in a system that punishes them for their affiliation with the United States rather than empowering them. Crippling federal regulations, exclusion from essential economic programs, and outdated tax policies keep this tropical gem from thriving. The very laws meant to regulate and grow America’s economy instead act as an economic chokehold, ensuring that the Virgin Islands—and other U.S. territories like Puerto Rico and Guam—remain dependent, underdeveloped, and struggling.

America’s Colonial Caste System

If you live in Texas or New York, you’re an American citizen with full rights and representation in Congress. If you live in the Virgin Islands, you’re still an American citizen—but without a voting representative in Congress or a say in presidential elections. And while Washington politicians love to preach democracy and fair governance on the world stage, they conveniently ignore the fact that 3.2 million Americans in territories like the Virgin Islands, Puerto Rico, and Guam are subject to laws they have no voice in shaping.

It’s a colonial relic, plain and simple. The Virgin Islands were purchased from Denmark in 1917 for $25 million, an acquisition justified at the time for military strategy during World War I. But over a century later, the U.S. government still treats the territory like a forgotten outpost rather than an integrated part of the nation. Unlike states, the Virgin Islands cannot vote for the president, and their sole representative in Congress, the “Delegate to the House of Representatives,” can propose legislation but lacks the power to vote on final bills. It’s taxation without representation—ironically, the very issue that sparked the American Revolution.

Economic Strangulation by Federal Red Tape

Despite its picturesque setting, the Virgin Islands struggle with staggering economic issues—sky-high unemployment, an eroded infrastructure, and limited industry diversification. This is not by accident; it is the direct result of stifling U.S. regulations that prevent the territory from competing on a global scale.

Take the Jones Act, one of the most notorious policies shackling the islands. Passed in 1920, this law requires that all goods transported between U.S. ports must be carried on American-built, American-flagged ships, crewed by Americans. The result? Shipping costs to the Virgin Islands are astronomically high, inflating the price of goods, food, and fuel. A gallon of milk costs more in St. Thomas than in Manhattan. The cost of electricity is double that of the mainland. The Jones Act effectively stifles trade and growth, keeping the territory at a competitive disadvantage against neighboring Caribbean nations that can freely trade without such constraints.

Then there’s the issue of federal funding—or rather, the lack of it. Unlike states, which receive robust federal grants for Medicaid, roads, and disaster recovery, the Virgin Islands are handed a fraction of the resources. After hurricanes Irma and Maria ravaged the islands in 2017, federal relief was slow, inconsistent, and riddled with bureaucratic obstacles. Meanwhile, Florida and Texas—hit by similar storms—saw swift and comprehensive aid packages. The message was clear: The Virgin Islands, despite being home to U.S. citizens, were an afterthought.

The Hidden Cost of American Bureaucracy

If the economic barriers weren’t enough, federal policies also cripple local businesses. The Virgin Islands operate under a different tax code from the mainland, yet they are still beholden to IRS rules and restrictions. This creates a paradox: The territory must generate its own revenue, yet is severely limited in how it can incentivize businesses or attract foreign investment.

Unlike offshore financial centers like the Cayman Islands or Bermuda, the Virgin Islands cannot independently structure their tax system to compete in global markets. If a business wants to relocate to St. Thomas to benefit from lower taxes, it still has to comply with IRS oversight in ways that other Caribbean nations do not. And while foreign banks freely operate in independent Caribbean nations, U.S. financial regulations make it nearly impossible for the Virgin Islands to develop a competitive offshore banking sector.

Then there’s the crushing effect of federal minimum wage laws. While the cost of living in the Virgin Islands is drastically higher than in most U.S. states, businesses are still forced to comply with federal wage mandates that don’t account for the local economic realities. The result? Small businesses struggle to stay afloat, unemployment soars, and young Virgin Islanders are forced to move to the mainland in search of better opportunities.

Tourism vs. Self-Sufficiency: The Island Trap

For decades, the U.S. government has positioned tourism as the Virgin Islands’ primary industry, funneling most economic efforts into this one-dimensional model. And while tourism is vital—bringing in over two million visitors annually—it is not a sustainable long-term economic strategy. A single hurricane, pandemic, or market downturn can devastate the entire industry overnight, leaving thousands without jobs.

The lack of economic diversity is not a failure of the local government but a byproduct of federal restrictions. Agriculture, which could thrive in the fertile lands of St. Croix, is strangled by USDA regulations that prevent local farmers from exporting produce freely. Manufacturing is stifled by trade laws that make it more expensive to operate on the islands than in other Caribbean nations. Renewable energy, a no-brainer for a sun-soaked region, faces endless federal hurdles that make large-scale solar or wind farms financially unfeasible.

Meanwhile, the U.S. could have allowed the Virgin Islands to develop a robust tech or financial sector, following the model of Singapore or Luxembourg—small territories that turned themselves into global economic powerhouses. But instead, the islands are treated as a vacation destination rather than an economic engine, ensuring their perpetual reliance on the mainland.

The Path Forward: A Call for Change

The Virgin Islands don’t need handouts; they need autonomy. They need the ability to compete, trade, and grow like any other economy. And that starts with major reforms:

1. Repeal the Jones Act – Allowing the Virgin Islands to import and export goods without the burden of outdated maritime laws would immediately reduce the cost of living and make local businesses more competitive.
2. Equitable Federal Funding – The U.S. must provide the same level of funding for infrastructure, healthcare, and disaster relief as it does for the states. If Virgin Islanders are American citizens, they should be treated as such.
3. Tax & Banking Reform – The territory should have the ability to restructure its tax system independently to attract businesses and develop an offshore banking sector.
4. Diversification Beyond Tourism – The U.S. should incentivize industries like agriculture, manufacturing, and renewable energy, allowing the Virgin Islands to build a more resilient economy.
5. Full Political Representation – If the U.S. truly believes in democracy, it’s time to grant the Virgin Islands full voting rights, including representation in Congress and presidential elections.

The Virgin Islands are not some forgotten, far-flung colony. They are part of America—home to U.S. citizens who serve in the military, pay taxes, and contribute to the nation’s economy. And yet, through outdated policies, bureaucratic neglect, and systemic economic oppression, they are denied the opportunities and privileges of full American status.

It’s time to end the hypocrisy. It’s time for Washington to stop treating the Virgin Islands like a colonial outpost and start treating them like what they are—an integral, vital, and deserving part of the United States. Until then, paradise will remain shackled, and America’s promise of equality will remain nothing more than a mirage on the Caribbean horizon.