[Congressional Record Volume 149, Number 133 (Thursday, September 25, 2003)]
[Senate]
[Pages S11999-S12000]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DASCHLE (for Mr. Graham of Florida):
  S. 1658. A bill to make residents of Puerto Rico eligible for the 
earned income tax credit, the refundable portion of the child tax 
credit, and supplemental security income benefits; to the Committee on 
Finance.
  (At the request of Mr. Daschle, the following statement was ordered 
to be printed in the Record.)
  Mr. GRAHAM. Mr. President, the Commonwealth of Puerto Rico has been a 
territory of the United States since 1898. Since 1917, people born in 
Puerto Rico have been citizens of the United States under Federal laws 
applicable in the territory.
  One of the interesting, and most misunderstood, aspects of Puerto 
Rico's unique relationship with the United States, is that the U.S. 
citizens who reside there are not required to file tax returns and pay 
income tax on the money they earn on the island. That might lead one to 
conclude that this is a huge benefit to the majority of people who live 
on the island. The reality, however, is that well over half--and 
perhaps as much as three-quarters--of Puerto Rican families would 
likely owe no U.S. income tax if they were taxed in the same manner as 
other citizens.
  Why? Because Puerto Rico struggles with a high rate of poverty. 
Fifty-eight percent of Puerto Rican children live below the national 
poverty level--which is an improvement from 67 percent in the early 
1990s. That means that today more than one-half of Puerto Rican 
children live in a family that earns less than $17,000 a year. In 
contrast, the State with the highest child poverty rate, Mississippi, 
has a child poverty rate of 27 percent.
  For over 30 years, U.S. policy toward improving the economic 
situation on the island has focused on corporate tax incentives. Today, 
I am introducing legislation that focuses on providing direct stimulus 
to the part of economy in Puerto Rico that has been neglected--Puerto 
Rican families and children. Putting money into the hands of the people 
who will spend it will provide the most direct stimulus for the economy 
of the island.
  This bill puts Puerto Rican families on par with other families in 
America by extending to them the benefits of our social safety net. 
Specifically, the bill makes residents of Puerto Rico eligible for the 
earned income tax credit, the refundable per child tax credit, and the 
Supplemental Security Income program.
  Although Puerto Rican families are not subject to the Federal income 
tax, they do pay Federal payroll taxes. Just like other working 
families in America that work hard and play by the rules, low-income 
employees in Puerto Rico deserve relief from those payroll taxes. The 
earned income tax credit and the refundable portion of the child tax 
credit have long been recognized as an effective way to provide such 
relief. The Puerto Rico Economic Stimulus Act says that families in 
Puerto Rico should also be able to claim these credits, in the same 
way, and subject to the

[[Page S12000]]

same limitations, as families in Florida, Tennessee, Texas, or New 
York.
  Workers in Puerto Rico pay payroll taxes like all other Americans. 
While some may disagree with the notion of providing refundable credits 
to offset payroll taxes that is a different debate than whether low-
income families in Puerto Rico should be treated the same as low-income 
families in the 50 States. This is a matter of equity, not tax policy.
  I ask unanimous consent that the full text of this bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1658

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Puerto Rico Economic 
     Stimulus Act of 2003''.

     SEC. 2. PUERTO RICO RESIDENTS ELIGIBLE FOR EARNED INCOME TAX 
                   CREDIT.

       (a) In General.--Section 32 of the Internal Revenue Code of 
     1986 (relating to earned income) is amended by inserting at 
     the end the following new subsection:
       ``(n) Residents of Puerto Rico.--
       ``(1) In general.--In the case of residents of Puerto Rico, 
     this section shall be applied--
       ``(A) by substituting `United States or Puerto Rico' for 
     `United States' in subsections (c)(1)(A)(ii)(I) and 
     (c)(3)(E),
       ``(B) by substituting `nonresident alien individual (other 
     than a resident of Puerto Rico)' for `nonresident alien 
     individual' in subsection (c)(1)(E), and
       ``(C) by substituting `gross income (computed without 
     regard to section 933)' for `gross income' in subsections 
     (a)(2)(B) and (c)(2)(A)(i).
       ``(2) Phase-in of credit.--
       ``(A) In general.--The credit allowable under this section 
     by reason of this subsection shall not exceed the applicable 
     percentage of the amount of credit which would otherwise be 
     allowable under this section (without regard to this 
     paragraph).
       ``(B) Applicable percentage.--The applicable percentage 
     shall be determined as follows:

The applicable percentage is--ear beginning in--
  2004..........................................................10 ....

  2005..........................................................20 ....

  2006..........................................................30 ....

  2007..........................................................40 ....

  2008..........................................................50 ....

  2009..........................................................60 ....

  2010..........................................................70 ....

  2011..........................................................80 ....

  2012..........................................................90 ....

  2013 and thereafter.......................................100.''.....

       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.

     SEC. 3. REFUNDABLE CHILD TAX CREDIT ALLOWABLE TO RESIDENTS OF 
                   PUERTO RICO WITH LESS THAN 3 CHILDREN.

       (a) In General.--Paragraph (1) of section 24(d) of the 
     Internal Revenue Code of 1986 (relating to portion of credit 
     refundable) is amended by inserting at the end the following 
     new sentence: ``For purposes of this paragraph, taxable 
     income shall be computed without regard to section 933.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2003.
       (c) Applicability.--
       (1) In general.--Any credit allowable by reason of the 
     amendment made by subsection (a) shall not exceed the 
     applicable percentage of the amount of credit which would 
     otherwise be allowable under section 24(d)(1) (without regard 
     to this subsection).
       (2) Applicable percentage.--The applicable percentage shall 
     be determined as follows:

The applicable percentage is--r beginning in--
  2004..........................................................10 ....

  2005..........................................................20 ....

  2006..........................................................30 ....

  2007..........................................................40 ....

  2008..........................................................50 ....

  2009..........................................................60 ....

  2010..........................................................70 ....

  2011..........................................................80 ....

  2012..........................................................90 ....

  2013 and thereafter..........................................100.....

     SEC. 4. SSI TO APPLY TO RESIDENTS OF PUERTO RICO.

       (a) In General.--Section 1614(e) of the Social Security Act 
     is amended by striking ``and the District of Columbia'' and 
     inserting ``, the District of Columbia, and the Commonwealth 
     of Puerto Rico''.
       (b) Application.--Section 1611 of the Social Security Act 
     is amended by adding at the end the following:

 ``Limitation on Benefits for Residents of the Commonwealth of Puerto 
                                  Rico

       ``(j) Notwithstanding any other provision of this title, in 
     the case of an individual who is a resident of the 
     Commonwealth of Puerto Rico who is eligible to receive a 
     monthly benefit under this title, the monthly benefits 
     payable under this title shall not exceed--
       ``(1) for each month occurring in 2004, 10 percent of the 
     monthly benefits that would, but for the application of this 
     subsection, be paid to the individual under this title;
       ``(2) for each month occurring in 2005, 20 percent of the 
     monthly benefits that would, but for the application of this 
     subsection, be paid to the individual under this title;
       ``(3) for each month occurring in 2006, 30 percent of the 
     monthly benefits that would, but for the application of this 
     subsection, be paid to the individual under this title;
       ``(4) for each month occurring in 2007, 40 percent of the 
     monthly benefits that would, but for the application of this 
     subsection, be paid to the individual under this title;
       ``(5) for each month occurring in 2008, 50 percent of the 
     monthly benefits that would, but for the application of this 
     subsection, be paid to the individual under this title;
       ``(6) for each month occurring in 2009, 60 percent of the 
     monthly benefits that would, but for the application of this 
     subsection, be paid to the individual under this title;
       ``(7) for each month occurring in 2010, 70 percent of the 
     monthly benefits that would, but for the application of this 
     subsection, be paid to the individual under this title;
       ``(8) for each month occurring in 2011, 80 percent of the 
     monthly benefits that would, but for the application of this 
     subsection, be paid to the individual under this title; and
       ``(9) for each month occurring in 2012, 90 percent of the 
     monthly benefits that would, but for the application of this 
     subsection, be paid to the individual under this title.''.
       (c) Termination of Other Programs for Residents of Puerto 
     Rico.--
       (1) Title I.--Title I of the Social Security Act is amended 
     by inserting at the end the following:


               ``termination for residents of puerto rico

       ``Sec. 7. This title shall not apply to residents of the 
     Commonwealth of Puerto Rico after 2012.''.
       (2) Title X.--Title X of the Social Security Act is amended 
     by inserting at the end the following:


               ``termination for residents of puerto rico

       ``Sec. 1007. This title shall not apply to residents of the 
     Commonwealth of Puerto Rico after 2012.''.
       (3) Title XIV.--Title XIV of the Social Security Act is 
     amended by inserting at the end the following:


               ``termination for residents of puerto rico

       ``Sec. 1406. This title shall not apply to residents of the 
     Commonwealth of Puerto Rico after 2012.''.
       (4) Title XVI.--Title XVI of the Social Security Act, as 
     applicable with respect to the Commonwealth of Puerto Rico 
     before the date of the enactment of this Act, shall not apply 
     after 2012.
       (d) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply to benefits payable in months beginning 
     on or after January 1, 2004.
                                 ______