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Menendez Leads Senate in Introducing Tax Legislation to Help Puerto Rico

U.S. Senator Bob Menendez (D-NJ) has introduced the “Earned Income Tax Credit and Child Tax Credit Equity for Puerto Rico Act,” which would extend the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) to all eligible families in Puerto Rico.

The initiative is similar to a proposal introduced by the Obama administration late Wednesday and to legislation sponsored by Puerto Rico Resident Commissioner Pedro Pierluisi in the House of Representatives.

Because of a disparity in current law, hundreds of thousands of American citizens residing in Puerto Rico do not qualify for the EITC and CTC programs, even though they would be eligible to receive these federal credits by moving to a state.  Puerto Rico has a higher level of child poverty than any state in the nation, and a substantial body of reserach shows that these tax credits lift a significant amount of their recipients out of poverty, encourage work, and provide education and nealth benefits.

As Sen. Menendez pointed out upon the bill’s introduction, “[n]ot only does this arbitrary policy unfairly punish struggling American families based solely on where they live, but it has also contributed to Puerto Rico’s current economic crisis by decreasing labor participation and increasing outmigration.”

“This legislation represents another important step towards eliminating inequities in current federal policy towards Puerto Rico,” said Sen. Menendez. “Instead of punishing low-income American families for calling Puerto Rico home, we should ensure they are treated the same as all other American citizens.  Extending the EITC and CTC to Puerto Rico will inject much needed funds into Puerto Rico’s ailing economy, encourage increased labor participation, and level the playing field for our fellow compatriots at a time when they need it most.  I thank my colleagues for joining me in this effort and vow to continue to do everything at my disposal to ensure that the federal government steps up and does its part to alleviate the economic and fiscal crisis crippling Puerto Rico.”

Menendez was joined by Senators Chuck Schumer (D-NY), Bernie Sanders (I-VT), Kirsten Gillibrand (D-NY), Richard Blumenthal (D-CT), Elizabeth Warren (D-MA), Cory Booker (D-NJ) and Martin Heinrich (D-NM),

“These tax credits would provide much-needed relief to Puerto Rican families,” said Sen. Kirsten Gillibrand. “No American parent or child should have to face economic hardship simply because of where they live. We must act to help them, and I will be urging my colleagues to pass this bill.”

“In my view, the federal government should not be discriminating against the people of Puerto Rico,” said Sen. Bernie Sanders.  “It is now time for us to do all that we can to help the 3.5 million American citizens in Puerto Rico improve its economy and lift its children out of poverty.”

“American citizens in Puerto Rico work hard every day to support their families, just like their fellow citizens in Massachusetts and other parts of the US,” said Sen. Warren. “This bill makes sure Puerto Rican families have access to the same tax credits that protect children.”

“The Parity for Puerto Rico Act is a crucial step towards ensuring equality between Puerto Rico’s low-income working families and families on the mainland.” said Sen. Blumenthal. “At a time when Puerto Rico’s 3.5 million U.S. citizens face tremendous suffering in large part because of unfair and unequal treatment under U.S. law, this legislation will assist struggling families, encourage employment, and help get the Puerto Rican economy back on track.”

“It’s more important than ever that Puerto Rican working families have access to the same economic tools that are available to Americans living in the fifty states and the District of Columbia,” said Sen. Chuck Schumer. “This legislation would right a wrong that is preventing thousands of Puerto Rican families from getting these credits and at the same time boost the local economy.”

Established in 1997, the Child Tax Credit (CTC) eases the financial burden that families incur when they have children. The refundable portion of the CTC, known as the ACTC, applies in Puerto Rico in limited and unequal fashion. The Earned Income Tax Credit (EITC) creates a financial incentive for individuals to seek and retain employment because it increases the ability of workers in low-paying jobs to support themselves and their families.

Based on U.S. Census data, expanding the CTC to Puerto Rico in full could potentially benefit an additional 300,000 families on the island, while extending the EITC could provide hundreds of millions of dollars a year in tax refunds to eligible households.

As Chair of the Senate Democratic Hispanic Task Force and the only Latino Democrat in the Senate, Menendez has been at the forefront of the fight to help confront the financial crisis in Puerto Rico. He is also the lead sponsor on Senate legislation to include Puerto Rico in the federal Medicare program that encourages the use of electornic health record technology.

Because Puerto Rico is not a state, it is not automatically included in federal legislation that govern and provide benefits for states.  In 198o, the Supreme Court ruled in Harris vs. Rosario that “Congress, which is empowered under the Territory Clause of the constitutiion. . . to “make all needful Rules and Regulations respecting the territory . . . belonging to the United States,” may treat Puerto Rico differently from States so long as there is a rational basis for its actions.”

Click here to download the full text of the bill.



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