It is widely known that Puerto Rico is bankrupt. We are victims of Corporate Greed. Greedy politicians in Puerto Rico, a US Territory of American citizens, in alliance with interested sectors in the island, including corporate lobbyists, CFC's, the local opposition parties, workers unions, local Banks, etc. have lobbied Congress for decades to obtain tax exempt privileges for US Corporations who do business in Puerto Rico. This has consisted in obtaining legislation that have created IRS Codes that define Puerto Rico as a foreign country for their tax benefit purposes. CFC (Controlled Foreign Corporations) does not mean they are foreign, it means Puerto Rico is foreign! This is a legal violation of the US Constitution Territorial Clause and deprives us of our Constitutional rights.
Puerto Rico is right at the center of this "TAX" storm. Our US Territory is their top choice for corporate money laundering. Many in Puerto Rico have been led to believe these corporate tax breaks are the only solution to our stagnant economy. However, these tax breaks have been around for over 60 years and we still continue with high unemployment and serious social problems which have escalated in high crime statistics, comparable to a war zone. It has also contributed to the economic debacle hitting the US taxpayer and workers, by taking jobs away from the US, increasing unemployment and then obtaining tax benefits to bring the money home under the false pretense of helping the US economy.
We need support to advance our struggle to stop this tax scam to the US Treasury, to the American Tax Payer and thu achieve equal rights for the almost 4 million disenfranchised US citizens in Puerto Rico. This is a critical moment in our Nation's history. Your fellow citizens in Puerto Rico need help in order to be part of the final tax and spending agreement.
This is a historic opportunity to redress an injustice that was made against the People of Puerto Rico in 1921, when Congress decided to treat Puerto Rico as a "foreign country" for tax purposes. While Congress approved the 1921 exclusion in order to promote economic development, this commendable objective has not been achieved in almost a century. Puerto Rico continues to fall behind all the states in the Nation, mired in economic, social and demographic stagnation for more than a decade.
Unfortunately, the 1921 tax exclusion that Congress established to help Puerto Rico has been transformed into a significant drain to the US Treasury, victim of well-documented transfer pricing abuses by the "Controlled-Foreign Corporations" (CFCs) in the Island. There is no economic or moral justification to allow a U.S. corporation to have tax savings of $22 million per year, per employee in Puerto Rico when their average salaries range in the "poor" definition with unemployment is at double digits.
This is the right moment when they are drafting legislation to finally include Puerto Rico in the U.S. tax code, with all the responsibilities and privileges of US citizens. This historic change can be achieved by deleting Section 933 of the Internal Revenue Code, and defining corporations incorporated in Puerto Rico as U.S. Corporations, for tax and other purposes.
With Puerto Rico´s full inclusion in the tax code, Congress can stop transfer pricing abuses and create effective tax benefits that generate real jobs and promotes tangible investments in Puerto Rico through specific legislation that treat US citizens in the Island in a manner similar to other communities in the 50 states. There is a real opportunity to draft effective legislation for Puerto Rico that creates a direct link between each dollar of federal tax benefits to a job, similar to the Earned Income Tax Credit that have benefitted residents in the 50 states since 1975. In addition, Federal tax benefits to generate real investments in Puerto Rico can be designed similar to the provisions in Enterprise Zone acts and the Promise Zones legislative proposals of President Obama.
Bringing back Puerto Rico as a full partner into the federal tax system would carry significant benefits to the People of Puerto Rico and the US Treasury, but are not possible without a strong commitment to carry them through to the final budget agreement. As everyone knows, there are formidable moneyed interests that benefit from using Puerto Rico as a tax heaven, and they are not going to give up the hugely inefficient tax deferral benefits without a fight. The almost 4 million disenfranchised US citizens in Puerto Rico count on the support of itss fellow citiaens in the 50 states to secure our equal rights and responsibilities and stop this legal tax scam.