[Congressional Record Volume 151, Number 157 (Thursday, December 8, 2005)]
[Extensions of Remarks]
[Page E2490]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        TAX REVISION ACT OF 2005

                                 ______
                                 

                               speech of

                           HON. JERRY WELLER

                              of illinois

                    in the house of representatives

                      Wednesday, December 7, 2005

  Mr. WELLER. Mr. Speaker, today I rise in strong support of H.R. 
4388--Tax Revision Act of 2005.
  This bill has many important components that assist the America in 
being competitive in a global economy, but I specifically want to talk 
about the provisions in this legislation that concern the Commonwealth 
of Puerto Rico and all the hard work that one of our colleagues, Luis 
Fortuno has done on this bill
  H.R. 4388 extends the benefits of the manufacturing deduction enacted 
with the American Jobs Creation Act of 2004 to manufacturing operations 
conducted in Puerto Rico.
  This is an issue of the utmost importance to the U.S. citizens of 
Puerto Rico, and being such, was a top legislative priority for Mr. 
Fortuno.
  Under current law, U.S. corporations that operate in Puerto Rico are 
subject to full U.S. tax on the income from those operations in the 
same manner as income from operations in the mainland.
  Thus, a U.S. corporation's income from manufacturing activities in 
Puerto Rico is subject to immediate tax in the United States, as well 
as being subject to tax in Puerto Rico. This difference in tax 
treatment under current law means that the tax burden of operating in 
Puerto Rico is significantly higher than in the United States.
  This means, Mr. Speaker, that you pay a higher tax of 35 percent on 
income on a product manufactured in Puerto Rico versus a lower tax of 
32 percent on that same product manufactured in the States.
  The higher tax burden creates a clear disincentive for U.S. companies 
to manufacture in Puerto Rico. It distorts manufacturing location 
choices, putting Puerto Rico at a disadvantage relative to the mainland 
in terms of attracting and retaining investment.
  This bill eliminates the disadvantage for manufacturing in Puerto 
Rico created under current law. It provides U.S. companies with 
comparable tax treatment for their manufacturing activities in Puerto 
Rico and their manufacturing activities conducted in the States.
  Last year, we enacted the American Jobs Creation Act to enhance the 
ability of U.S. companies to compete in the global marketplace.
  At the time, we stated that ``a reduced tax burden on domestic 
manufacturers will improve the cash flow of domestic manufacturers and 
make investments in domestic manufacturing facilities more attractive. 
Such investment will assist in the creation and preservation of U.S. 
manufacturing jobs.''

  I agree with this wholeheartedly. Extending equal treatment to 
manufacturing conducted in Puerto Rico will further enhance the ability 
of U.S. companies to compete in the global marketplace. It will assist 
in the creation and preservation of the local manufacturing jobs that 
are so vitally important to the Puerto Rican economy.
  This bill does not provide special benefit to Puerto Rico or to 
companies operating in Puerto Rico. It simply levels the playing field 
by treating manufacturing in Puerto Rico the same as manufacturing in 
the mainland, leaving companies free to choose where to locate based on 
business considerations.
  Mr. Speaker, once again, let me thank Mr. Fortuno for his hard work 
on this issue. I urge my colleagues to support this bill.

                          ____________________