Why Does GOP Tax Bill Tax Companies That Operate in Puerto Rico at a Higher Rate?

Do they not know Puerto Rico is an American territory?

It seems the extremely unpopular GOP tax plan proverbially kicks a man, or in this case Puerto Rico, when they’re down.

As the U.S. island territory struggles to recover from a $70 billion debt and the devastation left by Hurricane Maria, House Republicans voted for a 12.5 percent tax on intellectual property income of U.S. companies on the island and a minimum 10 percent tax on their profits in Puerto Rico. Senate Republicans passed the bill earlier Wednesday.

U.S. businesses with operations in Puerto Rico, a U.S. territory, will pay higher taxes than their counterparts on the U.S. mainland. This puts industries and jobs on the island at risk.

Tucked into the GOP’s tax reform bill, the additional tax intended to stop American companies dodging federal taxes by shifting their profits overseas. But because the U.S. tax code treats Puerto Rico as a foreign territory, business operations on the island get hit.

Puerto Rico leaders asked Republicans to exempt the island given its fragile economy. Three months after Hurricane Maria, more than 1 million Americans there still have no electricity, more than 250,000 are still without clean water, and more than 1,000 Americans died.

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