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Puerto Rico, A United States Territory Used For Corporate Offshore Tax Shelter

By   Follow Me on Twitter     Message Miriam Ramirez       (Page 1 of 1 pages)     Permalink

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by Miriam Ramirez MD

The Government of Puerto Rico, a US Territory of American citizens, in a shameful historical move, has joined interested sectors in the island, including Corporate lobbyists, CFC's, the local opposition party, workers unions, etc., to lobby Congress for a new amendment H.R.3020, to the Federal Internal Revenue Code that will code Puerto Rico, as USA territory, as a foreign country so it can continue to be the "American-Foreign" offshore tax haven for multinational corporations and Corporate Welfare. This bill will scam the US Treasury for billions of dollars.

Puerto Rico is right at the center of this storm. Our US Territory is their top choice for corporate money laundering. The people of 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. 

I believe these tax breaks have contributed directly or indirectly to these problems.

The proposed amendment does not provide a SPECIFIC requirement to create jobs with the repatriated profits. Without this provision, the companies will use the funds to increase dividends and buy back their battered stocks, like they did in 2004. The junket of business and political leaders from PR coming to DC will only create jobs in hotels and restaurants here, but will not convince the staff in Congress and US Treasury, who know how the companies make job and investment decisions.

The Bill is a major strategic blunder. Puerto Rico Governor Fortuño should have proposed the creation in PR of a federal island-wide enterprise zone, and the full incorporation of PR into the federal tax system. A federal enterprise zone in PR will provide tax incentives linked to job creation that Congress and the US Treasury can support.

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 Seeking a tax holiday ONLY for PR will contribute to the negative image that PR has in Congress and the US Treasury as an opportunistic tax haven who only cares about itself. For Fortuño, who portrays himself as a republican leader with national aspirations, supporting a tax haven only for PR is a major step back.

The 2nd section of the bill HR3020 is the key:

US Treasury and Congressional tax experts will instantly recognize HR3020 as a blatant attempt to reinstate the Section 936 federal tax exemption that existed for "possessions corporations" before 2006, but this time masked as a change in section 933.
You may also want to check other articles on Corporate Welfare in my blog: http://themjreport.blogspot.com/p/corporate-welfare.html

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Puerto Rico, A United States Territory Used For Corporate Offshore Tax Shelter