WASHINGTON, DC – U.S. Rep. Bill Pascrell, Jr. (D-NJ-09), a member of the tax-writing House Ways and Means Committee, and Resident Commissioner Jenniffer González -Colón (R-PR) introduced H.R. 3307, a slightly revised version of the Tax Equity and Prosperity for Puerto Rican Families Act of 2019, legislation that would provide a federal supplement to Puerto Rico’s newly-created Earned Income Tax Credit (EITC) program, as well as funding for EITC education and outreach to the island. In addition, the legislation would provide a similar supplement to the other U.S. territories. The legislation is part of a package of bills scheduled for consideration tomorrow in the House Ways and Means Committee.
“Puerto Ricans continue to suffer from the devastating impact of Hurricane Maria and we must do more to lift them up,” said Rep. Pascrell, who first introduced legislation to provide an Earned Income Tax Credit for residents of Puerto Rican in 2007. “Unlike Americans in every other state, working Puerto Rican taxpayers are excluded from accessing the federal EITC to supplement their incomes. This unfair restriction has tied the commonwealth’s hands at the worst possible time as islanders are recovering from disaster and facing high unemployment and unacceptable levels of poverty. The EITC has repeatedly proven a critical tool to alleviating poverty, improving health outcomes, and encouraging labor participation. Why shouldn’t our fellow Americans in Puerto Rico be able to earn the same benefit? With this federal support, we can provide a powerful tool for Puerto Ricans to get back on their feet and get a leg up.”
“As the sole representative for Puerto Rico, and it’s 3.2 million Americans, I am happy to introduce a revised version of the Tax Equity and Prosperity for Puerto Rican Families Act of 2019 with Rep. Pascrell to help support the Earned Income Tax Credit (EITC) program for my constituents. The EITC helps low- and moderate-income working individuals, by providing substantial support through tax credits to help alleviate financial burdens while encouraging work at the same time. Currently, the EITC is unavailable to Americans living in Puerto Rico and other territories, including members of the military, federal employees, and those who pay Federal taxes. Together with the infusion of funds and the greater engagement by a productive workforce would make a major contribution towards transforming the Island’s economy out of relative stagnation towards a healthy and steady growth path.” said Resident Commissioner González Colón.
The Joint Committee on Taxation estimates that this provision would reduce poverty by putting an extra $6.8 billion into the pockets of working Americans in Puerto Rico and other U.S. territories over the next ten years. The legislation is cosponsored by Reps. Don Beyer (D-VA-08), Suzan DelBene (D-WA-1), Bonnie Watson Coleman (D-NJ-12), Darren Soto (D-FL-09), Barbara Lee (D-CA-13), Nydia Velázquez (D-NY-07), Brian Higgins (D-NY-26), Danny K. Davis (D-IL-07), and Alexandria Ocasio-Cortez (D-NY-14), and Dels. Gregorio Kilili Sablan (D-No. Mariana Islands) and Michael San Nicolas (D-Guam).
As part of a comprehensive tax package that was enacted on the island in December 2018, Puerto Rico started implementing a local EITC in January 2019, joining the District of Columbia and 29 other states that have successfully implemented their own EITC.
In the 1990s, the EITC became a major component of federal efforts to reduce poverty. The local earned income credit will cost the Commonwealth an estimated $204 million annually and offer maximum credits between $300 and $2,000 depending on family size and configuration. The federal supplement is geared to serve as an incentive for Puerto Rico and the other U.S. territories to increase the size of their EITC.
The Earned Income Tax Credit is a proven policy success, incentivizing work and lifting 8.9 million Americans out of poverty in 2017 when paired with the Child Tax Credit. A growing body of research links the EITC to better infant health, improved school performance, higher college enrollment, and increased earnings throughout one’s life.