Menendez Leads Group of Senators in Introducing Legislation to Provide Equitable Tax Credit Treatment for Puerto Rico

Menendez Leads Group of Senators in Introducing Legislation to Provide Equitable Tax Credit Treatment for Puerto Rico

Bill Intro Follows Obama Administration Endorsement of Policy


WASHINGTON. D.C. – U.S. Senator Bob Menendez (D-NJ), joined by Senators Kirsten Gillibrand (D-NY), Chuck Schumer (D-NY), Bernie Sanders (I-Vt), Richard Blumenthal (D-Conn), Elizabeth Warren (D-Mass), Cory Booker (D-NJ) and Martin Heinrich (D-NM), today 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. 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 the mainland. Not 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. Bob 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.”

“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.”

“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.”

"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.”

“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.”

"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 introduction of this legislation comes a day after U.S. Treasury Secretary Jacob J. Lew, National Economic Council Director Jeff Zients, and Health and Human Services Secretary Sylvia Mathews Burwell unveiled a proposal to help Puerto Rico address its serious fiscal challenges.  In their proposal, the Obama administration endorsed the expansion of the EITC and CTC programs in Puerto Rico, along with other legislative and policy prescriptions Senator Menendez has advocated for, such as allowing Puerto Rico to access Chapter 9 of the U.S. Bankruptcy Code and mitigating the inequities that Puerto Rico faces under Medicaid.

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. In September 2015, Resident Commissioner Pedro Pierluisi introduced H.R. 3553 and H.R. 3552 in the House of Representatives, two bills that would include Puerto Rico in the CTC and EITC programs.

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. He has repeatedly pushed back on Republicans’ blame game, called for extending Chapter 9 bankruptcy protections to the island, and delineated bold steps the federal government must take.  

Click here to download the full text of the bill.

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