The GOP’s Tax Bill Kicks Puerto Rico When It’s Down

By Jennifer Bendery
Dec. 19,2017

The hits just keep coming for Puerto Rico.

As the U.S. island struggles to climb out of a $70 billion debt crisis and recover from the devastation of Hurricane Maria, House Republicans voted Wednesday to impose a 12.5 percent tax on intellectual property income made by U.S. companies operating on the island and a minimum 10 percent tax on their profits in Puerto Rico. The Senate passed the bill earlier in the day.

That means that businesses with operations in Puerto Rico will pay higher taxes than their counterparts on the U.S. mainland, which puts industries and jobs on the island at risk.

The provision, tucked into the GOP’s tax reform bill, was intended to stop American companies from dodging federal taxes by shifting their profits overseas. But because the U.S. tax code treats Puerto Rico as a foreign territory, business operations on the island will get hit.

Puerto Rico leaders had urged Republican lawmakers to exempt the island from the provision given its fragile economy. Three months after the hurricane hit, more than 1 million Americans there still don’t have power, more than 250,000 Americans don’t have clean water, and more than 1,000 Americans have died amid the insufficient federal response.

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“Puerto Rico is in the grip of a humanitarian crisis,” she fumed on the House floor. “Let’s be clear: Puerto Ricans are American citizens. They fight in our wars, many of them laying down their lives for our freedoms. Yet this bill continues treating Puerto Rico differently than the rest of the United States.”

Velázquez was particularly critical of Speaker Paul Ryan (R-Wis.) and House Majority Leader Kevin McCarthy (R-Calif.), both of whom visited Puerto Rico after the hurricane hit and vowed to help the island recover.

“They looked the people of Puerto Rico in the eye and made promises to help them,” she said. “This is how you help Puerto Rico?”

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