American jobs in Puerto Rico and other U.S. territories are threatened by the tax reform bill approved last week by the Senate and currently being harmonized in a congressional conference committee. The future of at least 250,000 jobs in Puerto Rico is at risk.
Contact congressional leadership now and urge them to treat corporations in Puerto Rico and other territories as domestic for tax purposes. Puerto Rico needs special exemption from these rules to protect its already weak economy and to be able to implement a successful economic development plan.
HOW TO TAKE ACTION:
Call Sen. Mitch McConnell (202) 224-2541, Congressman Paul Ryan (202) 225-3031, Sen. Chuck Schumer (202) 224-6542, and Congresswoman Nancy Pelosi (202) 225-4965. 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 urgently request that [NAME] safeguard jobs in Puerto Rico by treating the island as domestic for tax purposes in the proposed tax reform bill. Currently, Puerto Rico is considered as foreign and the tax bill imposes a 20 percent excise tax to foreign corporations. Thus, this new tax applies to corporations established in the Island. Puerto Rico needs special 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 up to 250 thousand jobs. Since approximately 80 percent of medical devices and pharmaceutical goods produced in Puerto Rico are consumed by U.S. citizens, the legislation affects all Americans. The stakes are just too high to ignore.
Will [YOUR SENATOR’S NAME] publicly support treating Puerto Rico as a domestic in jurisdiction in the US tax code?
This bill will deal a lethal hand to Puerto Rico, just two months days after the Island has gone through the worst natural disaster in almost 90 years.
Puerto Rico’s economy was on stilts prior to Maria. For many years, pharmaceutical manufacturing was the island’s powerhouse. After Congress repealed tax incentives that were created to attract outside investment, the economy started shrinking. It has been in that downward spiral since 2006.
As Congress deliberates how to keep companies from offshoring jobs to jurisdictions of lower corporate tax rates, it included a protectionist provision to keep jobs in “America”. U.S. territories not included.
Puerto Rico, for tax purposes, is treated as foreign. Therefore, companies established there – many of them American – are also treated as foreign and now face a new 20% excise tax on shipments to the U.S. Simply put, corporations will have no incentive to stay in the hurricane-stricken island, although Puerto Rico is a territory of the U.S.
Experts predict that this move could translate to an exodus of 250,000 jobs and a hemorrhagic loss of 30 percent of its GDP.
Under the Senate version, the excise tax is not considered, but it will impose other heavy taxes on intellectual property – a blow to pharmaceuticals that remain competitive largely because of their patents.
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.