The Incorporation of Puerto Rico

The Incorporation of Puerto Rico

By: Jorge Iván Rodríguez Feliciano, J.D.,M.B.A.

“I believe that we are guilty of a terrible injustice against the Puerto Ricans in relation to our Wages and Salaries Law… I believe that our reciprocated commercial agreements have been unfair with Puerto Rico. I believe that many other sins of omission and action which can be traced in this Congress have contributed to the social and economic crisis of the Puerto Ricans. Some day we will have to respond for those sins”. (Congressman Fred Crawford Republican for Michigan, March 7, 1940). 

The above statement seems as a prophecy about what would happen to Congress because of its segregated and unfair treatment towards the American citizens of Puerto Rico. Seventy-seven years after this address before Congress, Puerto Rico and its economy have come to a point in which segregated and unequal treatment has become toxic, not only for those who live on the Island but also for the economy of the United States. In Washington, it is known that corporate welfare and tax evasion of the fake foreign corporations reached its limit with Section 936 that never raised Puerto Rico from being the poorest zone with the weakest economy, lowest income per capita, and the highest unemployment rate under the American flag.

After 119 years under the American flag, Puerto Rico has the opportunity of becoming incorporated to the economic development of the United States as a domestic jurisdiction in the Federal Internal Revenue Code. This represents a change in the way of doing business and collecting tax. The President wants American corporations that operate in foreign countries to come back to the United States territory in order to recover the lost jobs and evaded taxes. The Trump plan will make more expensive for foreign corporations their tax relationship with the federal government while taxes will be lowered for domestic corporations and for American citizens. This change could end the more than 100 years of being treated as foreigners in terms of economic and tax plans of the nation.

Puerto Rico has been a platform for American corporations to generate riches using our territory and labor while receiving tax pardons for being treated as foreigners. This corporate welfare policy towards foreign corporations provoked the loss of thousands of jobs that left to real foreign countries. The time has come where having business in Puerto Rico under the fake foreign status in order to avoid the payment of Federal taxes has become a trick that does not work.  President Trump and Congress will impose a 20% tax to all foreign products that enter United States territory. The tax cost of being a foreign corporation now will be worse than the contribution cost of being a domestic corporation. It would be fair for Puerto Rico to participate as a state of the Union. To classify as foreign the operations of an American Corporation doing business in a territory of the United States as in Puerto Rico’s case whose workforce is led by American Citizens is a fraud and an act of aggression against the aspirations of equal treatment that each American citizen of Puerto Rico deserves. The employment of the American citizens of Puerto Rico cannot be based on the Federal government treating our families as foreign without equal rights and responsibilities while fake foreign corporations earn thousands of millions of dollars. The treatment as foreign goes against our right for statehood.  The plan to rebuild Puerto Rico has to be with political dignity, not with measures that keep us under a humiliating colonial indignity that for those of us who are decent do not accept.