Puerto Rico Needs Aids, Not New Taxes

NiLP Guest Commentary

Puerto Rico needs

aid, not new taxes

By Jesús G. “Chuy” García

The NiLP Report (January 21, 2018)

More than 3 million Americans live on the island of Puerto Rico. They may not have a vote in Congress, but they pay taxes and risk their lives fighting for the U.S. military.

Puerto Rico is facing both natural and man-made disasters. The natural disaster is the September category 5 hurricane that caused around $100 billion in damages and knocked down the electric grid. Today, over 3 months after the storm hit, about 40% of the island remains without electricity. Without electricity, businesses have struggled to operate, and tens of thousands of Puerto Ricans have been fleeing the island.

But the bigger threat Puerto Rico faces is man-made. The phasing out of federal tax credits beginning in the late 90’s led to the loss of 80,000 jobs and a prolonged recession. Unequal treatment under the law has meant that Puerto Ricans face higher shipping costs and receive less for Medicare and Medicaid. Even before the hurricane hit, Puerto Rico had a double-digit unemployment rate and debts of over $120 billion.

Unlike every state, Puerto Rico lacks the same right to declare bankruptcy for a fair process to restructure its debt. Instead, an undemocratic Control Board was created by Congress to rule over the island and stocked with conservative ideologues. The undemocratic control board is prioritizing the privatization and sale of island assets, decisions that could hobble the island for decades to come.

The Republican tax bill makes things significantly worse by creating two new taxes for U.S. companies in Puerto Rico. American company affiliates on the island are now treated as if Puerto Rico were a foreign country and intellectual property now has a 12.5 percent tax. These two provisions will negatively impact 250,000 jobs and 30 percent of the government’s revenue.

According to the Tax Policy Center, the wealthiest one percent will get 82 percent of Republican tax bill benefits over time. It is immoral that Puerto Rico is being hit with new taxes solely so the wealthiest Americans can get a bigger handout. Puerto Rico should not be treated like a piggy bank for the wealthiest one percent.

To help Puerto Rico we need to do four things. First, we need to help the island recover from Hurricane Maria with disaster aid.  Congress has still not passed an aid bill for Puerto Rico. This should be a priority for Congress to immediately act on. The aid package must be adequate to address the estimated $100 billion of damages. The administration’s initial request is not even close to sufficient to help the island recover from Hurricane Maria.

Second, we need to changes laws that discriminate against Puerto Rico. If Puerto Ricans are paying into Medicare at the same rate as mainland citizens, why are Puerto Rican doctors paid less? Why should the Jones act force Puerto Ricans to pay vastly more for basic goods?

Third, Puerto Rico’s current debt is an anchor dragging down Puerto Rico’s chances for an economic recovery. Excluding pension liabilities, Puerto Rico has about $80 billion in debt, much of it bought for pennies on the dollar by vulture funds. We need to forgive this debt burden, I support Sen. Warren’s efforts to do that.

Finally, we must invest in the island’s long-term economic development.  I support Sen. Sander’s bill to rebuild the island because, with improved education and infrastructure, Puerto Rico can grow its economy and prosper. There are more than 5 million Puerto Ricans living on the mainland and we must not turn our back on the 3 million Americans on the island.