Friday, September 25, 2020

P.R.’s Resident Commissioner Revives Child Tax-Credit Parity Measure

By on January 11, 2019

Puerto Rico Resident Commissioner Jenniffer González Colón

Editor’s note: The following originally appeared in the Jan. 10-16, 2019, issue of Caribbean Business.


Resident Commissioner Jenniffer González Colón is back at it, rallying support from allies in Congress to provide equal benefits to Puerto Rico’s U.S. citizens on the tax credit front. With the presentation of her bill, which would amend the application of the federal Child Tax Credit for the island, incentives would be on a par with those in the U.S. states. Because this is a second attempt, the question begs: What has changed in the congressional panorama that increases the chances of her bill being enacted?

“We have achieved the establishment of the basis for the need for this [equity in the application of the Child Tax Credit] in Puerto Rico. Many Democratic leaders have identified with this measure in the past. In fact, I just spoke with the office of Sen. Bob Menéndez [D-N.J.], who will be introducing a sister bill—the Senate’s version of this bill I introduced in the House,” the resident commissioner told Caribbean Business regarding the possibility that the measure will prevail, unlike what happened last year.

“This measure has Democratic backing. Once I move this measure out of the House, I know it will be much easier now because [Sen.] Marco Rubio [R-Fla.] has always introduced this amendment in favor of Puerto Rico and now we have [Florida Sen. Rick] Scott in the Senate. I trust that the Democrats will make good on their promise and it can be passed. I know that in the Senate we will be able to deliver the message, as well as for other measures that I am speaking with Democrats about to introduce in a bipartisan manner,” assured González Colón, who is a member of the Republican and New Progressive parties.

With her new approach, House Resolution 302 was filed Jan. 8, and is co-sponsored by Reps. Brian K. Fitzpatrick (R-Pa.), Sean P. Duffy (R-Wis.) and José E. Serrano (D-N.Y.). Specifically, the measure seeks to modify the Internal Revenue Code of 1986 to allow families in Puerto Rico to use the Child Tax Credit for their first or second child, as families are entitled stateside. Puerto Rican families only benefit from this credit when they have three or more children.

Different this time?

The bill is a duplicate of one introduced last year, which was also co-sponsored by Duffy, along with Rep. Darren Soto (D-Fla.) and former Rep. Thomas MacArthur (R-N.J.), who was defeated by former President Obama’s national security adviser, Andy Kim, in the midterm elections Nov. 6. The bill’s status continues to be “referred to the House Committee on Ways & Means.”

If the legislation’s subsections are passed, González Colón said her bill would inject more than $3 billion into Puerto Rico’s economy over the next decade and could benefit about 404,000 children, or 355,000 families.

“Although most Puerto Rican families do not pay federal income taxes, they do pay federal payroll taxes. Currently, families in Puerto Rico can use these federal payroll taxes to claim the Child Tax Credit if they have three children or more. However, only 12 percent of families in Puerto Rico have three or more children,” the resident commissioner said on the House floor last Monday.

According to a press release, this bill addresses a recommendation from the Congressional Task Force on Economic Growth in Puerto Rico to minimize the challenges faced by Puerto Rican workers and maximize their opportunities.

“The purpose of the Child Tax Credit is to be a tool to help families offset the expenses of raising children and to raise themselves out of poverty. Mississippi has the highest poverty level of any [U.S.] state. Puerto Rico’s poverty rate, now at 45 percent, is 178 percent higher than Mississippi’s. According to the Census Bureau, Puerto Rico has the lowest household income at $19,775, compared to $43,441 in the state of Mississippi, and $61,372 nationally,” González told lawmakers.

The previous session of Congress was unsuccessful in adding two amendments via the tax reform legislation. At that time, the resident commissioner assured Caribbean Business that her dialog with former House Ways & Means Chairman Kevin Brady (R-Texas) and then-Speaker Paul Ryan (R-Wis.) was aimed at pushing the final version of the legislation to include the Child Tax Credit amendments. Her efforts were unsuccessful as well.

A first score

However, the public debate resulted in a first—the Joint Tax Committee disclosing a letter that revealed the legislation’s scoring, or estimates, of the impact of the proposed bill in terms of whether it would increase or decrease the budget deficit by an estimated $2.9 billion over a 10-year period, which the resident commissioner called a minimal amount.

Scoring typically occurs during budget formulation, when considering proposed legislation and after a law has been enacted.

González Colón added that “no one can give you a logical explanation” about the reasons there is no parity in the application of the credit, and that “many argue it was an error….”

Now, with the Democratic control of the House, led by Speaker Nancy Pelosi (D-Calif.) and House Ways & Means Chairman Richard Neil (D-Mass.), the possibility the Republican resident commissioner’s bill is approved remains uncertain despite Republican control of the Senate.

“We must use our [Democratic] majority in the Ways & Means Committee to advance policies that put [U.S.] American families first. I will continue my fight for tax policies that are fair to working families and small businesses. I will work with my colleagues to develop innovative solutions to rebuild our infrastructure needs. And as I have throughout my career, I will oppose efforts to privatize Social Security and slash Medicare and will propose new ways for Americans to save for retirement and access affordable healthcare,” Neil said in his first press release after becoming chairman-designate Dec. 20.

“When I decided to aspire to [serve in] Washington, I did it committed to an agenda of -economic development and a healthcare agenda, [the] main elements on the agenda of the federal capital. As part of them, the Child Tax Credit has always been one of those options that have been endorsed by the Private Sector Coalition in Puerto Rico, with whom I will meet again this Saturday,” the congresswoman said.

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