Republicans Plan 2004 Tax Bills That Could Affect Puerto Ricans… Republican Gets Navy Base Disposal Review Agreement Reversed… Is Puerto Rico-interested Senator Bob Graham Out of Politics?… Puerto Ricans Win Elections in States

November 7, 2003
Copyright © 2003 THE PUERTO RICO HERALD. All Rights Reserved.

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Republicans Plan 2004 Tax Bills That Could Affect Puerto Ricans

Senate Majority Leader Bill Frist (R-TN) said this past week he thinks that "in the latter part of this Congress there will be more focus on tax benefits to increase jobs, help manufacturing, which is really suffering in this country." A top aide to the House of Representatives Republican majority also foresaw a 2004 tax bill. He suggested that it could provide tax benefits for investments or another increase in the tax benefits for families with children.

The legislation may or may not benefit Puerto Ricans. Tax benefits to help retain manufacturing jobs in the United States could probably include Puerto Rico. There is little chance, however, that it would include the proposal of Governor Sila Calderon ("commonwealth"/no national party) that profits companies based in the States receive from subsidiaries in U.S. territories chartered as "foreign" corporations be exempted from most or all federal income taxation.

The proposal has been rejected twice by the Senate Finance Committee and by House Ways and Means Committee Chairman Bill Thomas (R-CA). The Finance Committee has asked the General Accounting Office (GAO) and the Congress’ Joint Committee on Taxation for reports that are intended to expose the many flaws in the proposal, identify whether Puerto Rico needs special assistance or more equal treatment in federal programs, and provide information on the options.

The final report is due July 15, 2004 -- which would probably only enable the passage of non-controversial measures for Puerto Rico next year.

Calderon’s Internal Revenue Code (IRC) Section 956 amendment is controversial. Its tax benefits would primarily go to companies that are already very profitable in Puerto Rico and are expanding there. It would also provide significant tax benefits to plants that move from States to Puerto Rico. It would not, however, help the types of plants that have left Puerto Rico in recent years. In addition, the States have lost manufacturing jobs during the past three years at a much higher rate than Puerto Rico has lost manufacturing jobs -- despite claims by Calderon lobbyists to the contrary.

Industrial incentives may be able to include an extension of the expiring tax credit for Puerto Rico wages, investments, and taxes. But Calderon and her official representative in the Congress, Resident Commissioner Anibal Acevedo Vila, have discouraged the federal government from extending IRC Sec. 30A. It would have helped the types of plants that have left Puerto Rico in recent years but it also is associated with Acevedo’s main rival for the governorship, former Governor Pedro Rossello (statehood/D).

Instead of Calderon’s proposal, the Senate Finance Committee recently included manufacturing income from Puerto Rico in a nine percent tax cut for domestic manufacturing income. Acevedo, however, later dismissed the proposal by Senator John Kerry (D-MA), Committee Chairman Chuck Grassley (R-IA), and top Democrat Max Baucus (MT). Kerry also supports extending Sec. 30A but that idea was not considered because of opposition from Calderon and Acevedo.

The Committee also did not take up a proposal by Senator Bob Graham (D-FL) to extend two payments to low-income workers, as well as aid to low-income elderly, blind, and disabled individuals, to Puerto Ricans. Acevedo has also dismissed this idea. Graham has endorsed Rossello.

An extension of Sec. 30A and extensions of the payments to low income workers and low-income elderly, blind, and disabled individuals are, however, ideas that will be seriously considered in the GAO and Joint Tax Committee reports.

Republican Gets Navy Base Disposal Review Agreement Reversed

A requirement that planned disposals of property at the soon-to-be-closed Roosevelt Roads Naval Station in Puerto Rico be reviewed by the Congress before the plans are implemented was dropped Thursday from the year’s major bill to establish policy for national defense activities.

The action reversed an earlier decision by the leaders of the joint Senate-House ‘conference committee’ named to work out differences between the bills that each house of the Congress had passed, Senate Armed Services Committee Chairman John Warner (R-VA) and House Chairman Duncan Hunter (R-CA).

The turnabout came when Hunter proposed that a number of controversial provisions be dropped from the final bill in order to have agreement reached on the huge bill by a planned deadline of Thursday night. Hunter’s list included the Roosevelt Roads provision even though he had originally agreed to it. The conferees reached agreement on the bill Friday morning.

Hunter included the Roosevelt Roads provision in the list at the request of a House Subcommittee Chairman, John McHugh (R-NY). McHugh had been enlisted to oppose the proposal by Resident Commissioner Acevedo Vila, a nominal Democrat who has some Republican connections through lobbyists paid millions of dollars by the Calderon Administration.

The last-day reversal upset Senate Committee Member James Inhofe (R-OK). He wanted the review to ensure that federal property would not wind up in the hands of developers for less than a fair value.

A recently enacted law allocating funding for defense activities for the year requires the base to be closed by next April 1st and its property to be disposed of under normal base closure procedures.

Other than in the case of property to be used by other federal agencies, the procedures enable local governments to determine the future use of the property with the approval of the Navy.

Inhofe is said to want to make sure that individuals do not unduly benefit from what are now public resources because of the closure of the Navy’s training range centered on the island of Vieques, Puerto Rico. Navy officials have estimated the value of the Roosevelt Roads base’s property at up to $1.7 billion. The range was closed May 1st in response to Puerto Rican demands. The base’s primary function was to support training on the range.

Calderon and Acevedo proposed that most of the base be transformed into a resort complex after Rossello proposed that the base facilities be primarily used for a needed major port for the territory.

Because Calderon and Acevedo helped lead (unsuccessful) efforts to try to force the range’s closure before the Navy could replace it May 1st, the prospect of them determining uses that could benefit a large number of entrepreneurs has raised some concerns in Washington.

Inhofe and Warner also like the idea of a commercial port being developed on the site of the Roosevelt Roads base because this would maintain docking facilities that could be used by Navy ships as well as commercial vessels.

The Navy may still consult with the Armed Services Committees before Calderon Administration plans for the use of the property are implemented. Warner and Inhofe are too important for the Navy to ignore.

Is Puerto Rico-interested Senator Bob Graham Out of Politics?

One of the U.S. Senate’s most active members on Puerto Rico issues -- Bob Graham (D-FL) -- announced this week that he would not seek re-election next year.

Graham made the announcement after recently ending his campaign for the Democratic presidential nomination.

He is not intent on a retirement from politics, however. A source who has worked with Graham explained before the announcement that not running for re-election would make Graham available for the vice-presidential nomination or a Cabinet post in a Democratic administration.

Graham remains a leading prospect for the vice-presidency. The primary reason is that he is from Florida, a swing state in determining the presidency, and he could help win it for a Democratic ticket. Solid and moderate, he could also help a Democratic ticket in other States. Graham also commands respect from many other party leaders.

After Graham made his announcement, a senior advisor to the front-runner for the Democratic presidential nomination, former Vermont Governor Howard Dean, privately rated Graham as the best vice-presidential candidate.

On the other hand, Graham not running for re-election diminishes Democratic hopes of taking control of the Senate in next year’s elections. It was believed that Graham would win if he ran again for the Senate but a Republican might well win the seat if he does not.

In 1998, Graham was one of the two lead sponsors of a Senate bill to enable Puerto Ricans to choose Puerto Rico’s political status from among all the options -- U.S. statehood, nationhood, and a continuation of the current U.S. territorial status until statehood or nationhood is chosen. After passage was blocked, he was a leading co-sponsor of a resolution that passed the Senate that said the Senate would consider a Puerto Rican status choice.

A member of the Senate Finance Committee, Graham was a leading sponsor of a law that quadrupled funding for health insurance for low-income children in the U.S. territories. He also helped increase the cap on medical aid for low-income individuals in the territories and worked to extend the federal tax credit for wage, capital investment, and local tax spending in Puerto Rico by companies based in the States. As noted earlier, he, additionally, recently proposed a bill to extend federal payments to low-income workers and assistance to low-income elderly, blind, and disabled individuals to Puerto Rico.

Graham was elected to the Senate in 1986 after eight years as governor and 12 in the State legislature.

Puerto Ricans Win Elections in States

A number of individuals with roots in Puerto Rico won public offices in elections in States this past Tuesday.

The most prominent was Mayor Eddie Perez of Hartford, Connecticut. A native of Corozal, PR, he was re-elected mayor of the State’s capital city.

Six people of Puerto Rican heritage were elected to the City Council.

Six people of Puerto Rican heritage were also elected to the Bridgeport, CT City Council.

Five individuals with roots in Puerto Rico were elected to the New Jersey State legislature. While most of the Puerto Ricans elected Tuesday are Democrats, one of the New Jersey legislators is a Republican.

Puerto Ricans were also elected to the Hudson and Passaic County, NJ legislative bodies and to the Woodbine, NJ Town Council.

Nine people of Puerto Rican heritage were elected to the 51-member New York City Council. They include the sons of U.S. House of Representatives Member Jose Serrano (D-NY) and Bronx, NY County Democratic Chairman Jose Rivera, who have both been active on Puerto Rico issues.

A Puerto Rican was elected to the Philadelphia, Pennsylvania City Council. He replaced a long-standing incumbent of Puerto Rican heritage who had been defeated in a primary election.

Other individuals of Puerto Rican heritage were elected to the city councils of Bethlehem and Lancaster, PA.

Two people with roots in Puerto Rico were also elected to the Lawrence, MA municipal assembly.

The "Washington Update" appears weekly.

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