GOP Tax Bill Punishes Puerto Rico As It Struggles To Recover

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In an effort to punish companies that relocate overseas to avoid taxes, the tax bill will also punish Puerto Rico.

As part of the tax code overhaul now on its way to President Donald Trump's desk, Republicans included a provision that will likely have devastating effects on the island of Puerto Rico, still recovering from the aftermath of Hurricane Maria.

House Republicans voted Wednesday to impose a 12.5 percent tax on intellectual property income made by U.S. companies operating on the island and a minimum 10 percent tax on their profits in Puerto Rico. The Senate passed the bill earlier in the day.

The measure was meant to discourage American companies from relocating overseas to avoid taxes, but because Puerto Rico is considered a foreign territory for U.S. tax purposes, companies on the island will be affected.

Puerto Rico leaders had urged Republican lawmakers to exempt the island from the provision given its fragile economy. Three months after the hurricane hit, more than 1 million Americans there still don’t have power, more than 250,000 Americans don’t have clean water, and more than 1,000 Americans have died amid the insufficient federal response.

Rep. Nydia Velázquez (D-N.Y.), who is Puerto Rican, took to the House floor to slam her Republican colleagues for adding insult to injury while the island continues to struggle following the hurricane devastation:

“Puerto Rico is in the grip of a humanitarian crisis,” she fumed on the House floor. “Let’s be clear: Puerto Ricans are American citizens. They fight in our wars, many of them laying down their lives for our freedoms. Yet this bill continues treating Puerto Rico differently than the rest of the United States.”

The governor of Puerto Rico was incensed as well, saying Monday that Republicans who voted for the tax bill could expect retribution at the polls:

Puerto Rico Gov. Ricardo Rosselló has said the tax provision would be “a huge blow” that would negatively affect 50 percent of the island’s gross national product, 30 percent of the government’s revenue and more than 250,000 jobs.

“We will analyze those who turned their back on Puerto Rico, who passed a bill that goes against the spirit of the law,” he told the Miami Herald.

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