by Countable | 12.14.17
The GOP tax reform is massive, with many provisions that have flown largely under the radar. One imposes a 20 percent tax on manufacturing imports from Puerto Rico. Puerto Rican officials were told by GOP leadership it would be removed before final passage, but it's still in there.
Lin-Manuel Miranda, creator of Hamilton, published an op-ed in the Washington Post Thursday begging Congress to remove the provision before final passage, expected next week.
The provision is also worrying manufacturers in Puerto Rico, who fear it will harm the island's recovery from recent hurricanes. According to NPR, medical manufacturing companies are working to get back up to speed on production -- but with continued power outages and storm damage to contend with, they're worried about their futures on the island.
Though there are still tax advantages for companies that manufacture goods in Puerto Rico, some of the significant tax breaks that caused manufacturers to flock to the island starting in the 1950’s were phased out starting in the 1990’s.
That phase out caused many companies who had set up shop in Puerto Rico to flee the island, drastically changing the Puerto Rican economy and helping set the stage for the debt crisis the territory faces today.
Critics of the island’s corporate tax break system, however, argue the effort never promoted a sustainable, local economy.
Despite the phase out that ended in 2006, there are still companies based on the island. Half of the island's economy is fueled by manufacturing. The situation for some is dire, though, in the wake of Hurricane Irma and then Maria. Power outages are still widespread, phone and internet service are spotty, and immigration to the mainland is shrinking the skilled workforce.
Companies are stepping up to provide meals, daycare and other services to help employees and are frustrated with the pace of recovery.
Governor Ricardo Rosselló and Rep. Jenniffer González are lobbying on behalf of the island to prevent inclusion of the 20 percent tax on all goods manufactured and sold to the mainland in the tax reform bill. If the tax is imposed, some fear manufacturers on the island may not be able to compete with manufacturers on the mainland and will be forced to leave.
González says she has been assured by Republican leadership that the measure will be removed from the tax reform bill before final passage, but as a non-voting delegate she has little leverage to ensure that happens.
Should an import tax on goods manufactured in Puerto Rico be included in the tax reform bill? Why or why not?
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— Asha Sanaker
(Photo Credit: Wikimedia / Creative Commons)
Written by Countable