Puerto Rico and Tax Reform Amendments

Congress is hoping to pass their tax reform bill this year. Both the House and the Senate have passed tax bills, and now the two have to be harmonized if the legislature wants to cross “tax reform” off their 2017 goals list. The new tax plan will affect Puerto Rico as well as the 50 states. But there have been some amendments that would make a difference for Puerto Rico.

Senator Chris Coons (D-DE) proposed this amendment:

FULL RECOVERY FUNDING FOR PUERTO RICO AND THE U.S. VIRGIN ISLANDS BEFORE TAX CUTS FOR THE WEALTHY.

Any provision of this Act which provides a reduction in taxes for the wealthiest Americans shall apply only to taxable years beginning after the date on which full funding is provided to the residents of Puerto Rico and the U.S. Virgin Islands for their hurricane recovery efforts and all such residents have access to electricity, telecommunications, safe drinking water, and wastewater services.

Reps Nelson and Menendez proposed this amendment to the new tax bill:

This Act, including any amendments made by this Act (except for the amendments made in section 13823), shall be null and void and have no effect with respect to income derived from sources within Puerto Rico until all bona fide residents of Puerto Rico (as defined for purposes of section 933 of the Internal Revenue Code of 1986) are treated in the same manner as residents of the 50 States for purposes of such Code.

They also proposed amendments extending the Earned Income Tax Credit and the full Child Tax Credit to Puerto Rico.

The Earned Income Tax Credit, which currently does not apply to Puerto Rico, provides cash to working people with incomes below the poverty level. The Child Tax Credit provides cash to parents. In Puerto Rico, it applies to the third child and later children, not to a family’s first two children. In the States, it applies to all children.

Both of these amendments were tabled — that is, they were not accepted.

Speaker of the House Paul Ryan said in a statement on his web page, “It is our intention to make improvements to our tax reform legislation as it relates to Puerto Rico when we go to conference.” We hope to see Puerto Rico treated more fairly under the new tax code. However, there is a simpler solution.

Join us in the fight for statehood for Puerto Rico.