[Congressional Record Volume 147, Number 100 (Wednesday, July 18, 2001)]
[Extensions of Remarks]
[Page E1358]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        INTRODUCTION OF ECONOMIC REVITALIZATION TAX ACT OF 2001

                                 ______
                                 

                          HON. PHILIP M. CRANE

                              of illinois

                    in the house of representatives

                        Wednesday, July 18, 2001

  Mr. CRANE. Mr. Speaker, today I am proud to introduce with my 
colleagues the Economic Revitalization Tax Act of 2001. This 
legislation is designed to revitalize one of America's most important 
economic partners. The Commonwealth of Puerto Rico, home to 3.9 million 
U.S. citizens, purchases over $16 billion a year in goods and services 
from the rest of the United States. A strong economy in Puerto Rico 
helps generate over 320,000 jobs in the U.S. mainland.
  A strong Puerto Rican economy should be important to all of us. We 
need to recognize that since October of 1996 manufacturing employment 
in Puerto Rico has declined by 16,000 jobs, a drop of over ten percent. 
No other U.S. jurisdiction has lost manufacturing jobs at such a high 
rate. In calendar 2001, a growing number of American companies, 
including Intel, Coach, Sara Lee, Phillips Petroleum, Star Kist and 
Playtex have announced that they will close or reduce operations in 
Puerto Rico. This will entail a loss of more than 8,700 additional 
direct jobs. These jobs are being lost to foreign competitors.
  Puerto Rico's main competitors enjoy significant advantages. For 
example, Singapore, Malaysia and Mexico have significantly lower wages 
and fringe benefits. Ireland enjoys low transportation costs and duty-
free access to the European Market. Malaysia and Mexico not only have 
much lower wage costs but have less stringent environmental, health, 
safety and welfare standards.
  To reverse this trend, today we are introducing legislation that will 
help make Puerto Rico more attractive to investors. Our bill simply 
states that if you invest in Puerto Rico instead of in a foreign 
country, you may bring your profits back into the U.S. at a preferred 
tax rate. This will not only help Puerto Rico directly, but it will 
also help the American economy by returning profits to the U.S. where 
they can be invested in other job creating activities.
  In 1993 Congress imposed significant restrictions on the value of 
these tax incentives to raise more than $3.7 billion in revenue to help 
balance the federal budget. In 1996, Congress approved a ten-year 
phase-out of what remained of these provisions (section 936 and section 
30A of the Internal Revenue Code) to offset more than $10 billion in 
the cost of federal tax benefits enacted to alleviate the impact of the 
increase in the minimum wage. This legislation is Puerto Rico's best 
opportunity to participate in the tax reduction measures that Congress 
enacted earlier this year. Puerto Rico helped reduce the budget 
deficit. It is now time for the U.S. citizens of Puerto Rico to benefit 
from the budget surplus.

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