Economists Say Extending Tax Credits to Puerto Rico Would Stimulate Economy
Puerto Rico does not have equal access to tax credits designed to support low income working families, including the Earned Income Tax Credit and the Child Tax Credit. While extending these credits to Puerto Rico has been proposed many times over the years, PROMESA and the renewed commitment of the United States to enhance Puerto Rico’s economic growth mean that the concept is being considered again before Congress, and with greater seriousness.
Economists Arthur MacEwan and J. Tomas Hexner have published research proving that that extending the Earned Income Tax Credit and the Child Tax Credit to Puerto Rico would not only assist individuals and families, but it would also stimulate Puerto Rico’s economy.
The Earned Income Tax Credit(EITC) is available to low-income working parents in the States when they file their income tax returns. Residents of Puerto Rico generally are not required to file income tax returns, and this has been given as a reason that Puerto Rico should not be eligible for the EITC. However, EITC payments are made to low-income families in the States, whether the workers in those families owe any taxes or not. In fact, only $10 billion of the $73 billion paid out in tax refunds in 2015 was actually a refund of taxes paid, according to government figures. The remaining $63 billion was payments to people who paid no taxes — just like the residents of Puerto Rico.
MacEwan and Hexner further point out that the EITC was intended to make up for payroll taxes, which residents of Puerto Rico pay at the same rates as residents of the States. It is, they say, an essential unfairness to make tax credits available to people in the States who do not pay income tax, but not to make it available in Puerto Rico. The goal of the EITC is to help lift families out of poverty, and Puerto Rico has a higher poverty rate than any of the States. Some of those who argue against extending the EITC say that people who are helped by this tax credit in Oklahoma or Delaware might at some point end up paying income taxes. The EITC is therefore an investment in their future prosperity, which they will share with the federal government. Since there are now more Puerto Ricans on the U.S. mainland than on the Island, it is equally reasonable to suggest that families which are helped in Puerto Rico may one day pay income taxes in the States.
Read more: http://www.puertoricoreport.com/economists-say-extending-tax-credits-puerto-rico-stimulate-economy/
