Saturday, December 16, 2017

Just to prove it wasn't an accident


That the response to the Hurricane Maria disaster was itself such a disaster, the Republicans in Congress added a key feature to the bill that will fuck over Puerto Rico quite nicely.
The final legislation negotiated by the House and Senate would treat mainland companies in Puerto Rico, a United States commonwealth, as it does those in foreign countries, and impose a 12.5 percent tax on income they receive from intellectual property. The bankrupt Puerto Rican government, which lobbied intensely for special tax treatment, fears that the bill could endanger crucial industries and thousands of jobs on the island.

“This is really a devastating blow for Puerto Rico, in our greatest time of need,” Gov. Ricardo A. Rosselló said on Friday.

The tax bill’s effect on Puerto Rico could have been worse: Had Republicans opted for the House version of the bill, American companies that import goods from their affiliates abroad would have been charged a 20 percent excise tax. That tax, intended to keep American profits from being shifted overseas, would have threatened much of Puerto Rico’s pharmaceutical and medical industry. It ultimately did not make the compromise plan.

Still, the new intellectual property tax was unwelcome news for leaders dealing with an economy in free fall. Mainland companies — mostly in medical manufacturing — make up about a third of Puerto Rico’s tax base, and directly or indirectly employ about 250,000 Americans, according to the Rosselló administration. Maria forced companies to halt production of drugs, medical supplies and devices, leading to worrisome shortages in places as far away as Iowa. Now, the government worries that those businesses, facing a new tax on top of Maria’s vast ruin, could eventually leave the island altogether.

Though Puerto Rico is home to 3.4 million United States citizens, the tax code treats the island as both a foreign and domestic entity. American affiliates in Puerto Rico get tax breaks like the ones granted to foreign companies, while the goods they produce are sold as made in America.

The tax on intellectual property, which includes patents and design rights, would make Puerto Rico less attractive for business, compared with foreign countries that offer lower tax rates for manufacturers, said Ramón Ponte, president of the Puerto Rico C.P.A. society.

“A lot of companies are going to look at the numbers and decide that, under the circumstances, it’s better to leave,” he said. “The issue is not Puerto Rico versus the mainland: It’s really Puerto Rico versus its competitiveness with other foreign jurisdictions.”

If Republicans want to protect American jobs, as President Trump has pledged, then Congress should consider Puerto Rico a domestic entity, said Mr. Rosselló, who spent last Wednesday on Capitol Hill, making one last push for support. The governor predicted the tax plan would renew debate on the island about its commonwealth status. A vote on the tax bill could come as early as Monday or Tuesday.

Mr. Rosselló accused Republican leaders — several of whom made highly publicized trips to Puerto Rico after Maria — of reneging on Congress’s commitment to help the island regain its financial footing.
Of course the Republicans reneged on their promises. Republicans never keep their promises to people with Spanish names.

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