Congressmen re-introduce tax credit bill that would benefit US territories
US Sen. Bob Menendez (D-N.J.), a senior member of the Senate Finance Committee, and Roger Wicker (R-Miss.) reintroduced the Territory Economic Development Tax Credit Act (TEDTCA), which would create a tax credit for wages and tangible investments made by US-based businesses in US territories.
This bill will support job creation and help strengthen the US supply chain for manufacturing goods across American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the US Virgin Islands.
“This legislation will incentivize businesses to spur job creation and economic development for the 3.5 million hard-working American citizens that call the US territories home,” Menendez said.
“This bill directly ties tax credits available to US businesses to the jobs they create and the tangible investments they make in the territories, and will also undo some of the negative impacts of the 2017 tax law which disincentivized US companies from investing in the local economies of the US territories,” he said.
I look forward to working with my colleague Senator Wicker to pass this bill into law, which will help propel economic growth and much-needed job growth in the US territories,” he said.
The TEDTCA would:
- Create a business tax credit for wages and tangible investments made by active US parent corporations with branches operating in the territories; 80% of income must be sourced from a territory; 75% must come from an active trade or business in a territory.
- Credit would be equal to 40% of eligible wages and benefits paid or provided to employees in the territory, capped at the current Social Security contribution base; credit equal to 25% of eligible tangible investments made in the territory could be claimed.
Puerto Rico would directly benefit from the measure, as the island’s lack of jobs and unemployment rates remain high, the lawmakers said. In Puerto Rico, the legislation is supported by both the Senate President and the Speaker of the House of Representatives.
“Upon enactment, the legislation will provide for significant job opportunities and critical investments in Puerto Rico’s manufacturing sector,” Senate President José Dalmau said in a letter to Menendez.
“It will also help address the reshoring of vital supplies of pharmaceuticals and medical devices and other advanced manufactured products critical to US national security,” he added.
Meanwhile, House Speaker Rafael “Tatito” Hernández said in a separate letter that the legislation would “mitigate the impacts of global intangible low-taxed income on Puerto Rico (…) by offering a tax credit against it [as] long as qualified US companies meet certain thresholds tied to jobs and investments in Puerto Rico.”
“The decisions Congress makes on this will impact thousands of lives. (…) Puerto Rico has lost more than 100,000 manufacturing jobs since the phase-out of 936 began [with] the drawdown on Puerto Rican operations [leaving] the US at risk for key product lines,” Hernández said.