[Congressional Record (Bound Edition), Volume 151 (2005), Part 20]
[Senate]
[Page 27066]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  MANUFACTURING DEDUCTION LEGISLATION

  Mr. SANTORUM. I introduced a bill last month, S. 1816, that is 
vitally important to manufacturing businesses and the workers they 
employ in Puerto Rico. My bill extends the benefits of the 
manufacturing deduction, enacted last year with the American Jobs 
Creation Act of 2004, to apply to manufacturing operations that are 
conducted in Puerto Rico and are subject to full U.S. tax.
  The new manufacturing deduction means that U.S. businesses operating 
in any of the 50 States will pay tax on their manufacturing income at 
32 percent. Without the manufacturing deduction, U.S. businesses 
operating a branch in Puerto Rico will pay tax on their manufacturing 
income at 35 percent. This difference in tax treatment creates a 
disincentive for U.S. companies to conduct manufacturing operations in 
Puerto Rico, distorting manufacturing location choices and putting 
Puerto Rico at a disadvantage in terms of attracting and retaining 
investment.
  My bill makes sure that manufacturing in the 50 States and 
manufacturing in Puerto Rico will be taxed at the same 32 percent rate. 
This will level the playing field for operations in Puerto Rico and 
operations in the States. I have a number of constituent corporations 
that operate in my State and have operations in Puerto Rico, and this 
provision is important to them.
  I realize the proposal cannot be added to the budget reconciliation 
tax bill at this time but am hopeful it will be considered and enacted 
this year.
  I want to applaud Ways and Means Committee Chairman Bill Thomas for 
introducing H.R. 4323, which includes this extension of the 
manufacturing deduction to Puerto Rico. I look forward to working with 
Chairman Thomas to get this important provision enacted.

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