Puerto Rico is set to become the world’s worst economy in 2018. Read that again. Puerto Rico is set to become the world’s worst economy in 2018. Our representatives in Congress did not exclude Puerto Rico from provisions in the tax reform bill that will force companies to leave the island, killing at least 250,000 jobs in the process.
Contact Sen. Marco Rubio and tell him to VOTE NO on the TAX REFORM BILL to safeguard jobs in Puerto Rico.
HOW TO TAKE ACTION:
Call Senator Marco Rubio’s office at 202-224-3041. Fill out the blanks and read the script when the staff answers the phone or leave a voice message.
“Hi, my name is [NAME], I am a voting constituent living in [CITY/TOWN] and my zip code is [ZIP CODE #].
I’m calling to urge Senator Marco Rubio to vote no on the tax reform bill. If he can stand for the Child Tax Credit he can stand for jobs in Puerto Rico. Puerto Rico must not be an afterthought. Currently, Puerto Rico is considered as foreign and thel tax bill imposes a 12.5 percent tax on income businesses generate from intellectual property.
Puerto Rico needs an exemption from these rules to protect its already weak economy and to be able to implement a successful economic development plan. Otherwise, experts project the Island could lose thousands of jobs. Puerto Rico is already on track to become the world’s worst economy in 2018 according to the Economist Intelligence Unit. Puerto Rico’s battered economy cannot take this additional hit. The senator’s vote will be remembered.
Will Senator Marco Rubio protect jobs in Puerto Rico?
There are about 50 firms in Puerto Rico that manufacture drug products and medical devices. These are high-skilled jobs that contribute to over 30 percent of Puerto Rico’s gross domestic product. Unfortunately, existing Federal tax reform legislation threatens to kill up to 250,000 jobs in the Island. Since approximately 80 percent of medical devices and pharmaceutical goods produced in Puerto Rico are consumed by U.S. citizens, the legislation affects the public health of all Americans.
The tax code treats Puerto Rico as foreign for tax purposes, meaning that corporations on the Island are treated as foreign corporations.
The tax bill being considered by the Senate imposes an excise tax on certain amounts paid by a U.S. corporation to certain related foreign corporations. Payments, other than interest, are subject to the new 20 percent excise tax. The payment is due on every purchase. This means that the excise tax applies when a parent corporation buys a good manufactured in Puerto Rico by its subsidiary located on Island. If a foreign corporation buys the same product from a domestic (mainland) subsidiary, the excise tax does not apply.
This is not a provision specifically targeting Puerto Rico. However, it negatively impacts the Island because the U.S. tax code treats Puerto Rico’s corporations as foreign corporations.
Puerto Rico needs either special exemption from these rules, a reduced rate, or some other specially designed treatment to incorporate them as domestic corporations into the tax code.