SAYS STATEHOOD WOULD WIN VOTE ON THE STATUS
The Government of Puerto Rico would have ultimate control over radio and television standards, wages and labor relations, and the environment — replacing U.S. Government authority — under the latest political status proposal of the “commonwealth” party’s most influential leader on status issues for most of the past 45 years.
In an interview with El Vocero newspaper in the territory, former Governor Rafael Hernandez Colon also opposed a referendum on statehood. His reason? Puerto Ricans would vote for the status.
The three-term governor is now one of four leaders of his party charged by its Governing Board with reaching an agreement on a new definition of “commonwealth.” The proposal is being developed for a plebiscite on the territory’s future status under a Federal law enacted just over a year ago.
Federal officials have repeatedly rejected the party’s current proposal, adopted for a plebiscite in 1998, as impossible for constitutional and other reasons.
Under Hernandez Colon’s latest proposal, ocean freight shipping between Puerto Rico and the States would also be exempted from the laws requiring the use of U.S. built, owned, flagged, and crewed vessels. There would also be a procedure for the Commonwealth government to conduct international relations.
The former Governor said that the proposal could be called “Improved, Developed, or Perfected Commonwealth.”
Puerto Rico is treated as a State under Federal ocean shipping and international relations requirements as well as under broadcasting, labor, and environmental laws.
Proposal Last July Rejected
Hernandez Colon suggested a different new “commonwealth” in a speech to party leaders last July. Governor Alejandro Garcia Padilla, the party president, then embraced it in his Puerto Rico Constitution Day address a week later, repeating what Hernandez Colon had said almost word for word.
There was enough opposition to that proposal in the Governing Board, however, that it was not adopted despite several efforts to win its approval. Although it had majority support, the number of opponents made clear that the proposal would not be able to pass in Puerto Rico’s Legislative Assembly.
The objections came from leaders such as former Governor Anibal Acevedo Vila, a former aide to Hernandez Colon who brought Garcia Padilla into political prominence.
The part of the proposal to which they objected would have left Puerto Rico partially subject to the broad power of each Congress to govern territories under the U.S. Constitution’s Territory Clause.
The proposal called for Puerto Rico to be exempted from this power as if it were a State. The opposed party leaders objected that Congress would still be able to govern Puerto Rico in other areas. This is an authority that Hernandez Colon himself has written is “undemocratic” because the territory does not — and cannot — have voting representation in the Congress.
Other parts of Hernandez Colon’s 2014 proposal would have:
- funded Puerto Rico equally with the States in Federal programs;
- exempted income that companies in the States claimed from manufacturing in the territory;
- limited the importation of foreign products into Puerto Rico, and
- empowered the Commonwealth government to determine international airline routes involving Puerto Rico.
As in his new proposal, ocean shipping between Puerto Rico and the States could be on foreign vessels.
Alternative Nationhood Proposal
Acevedo Vila and other leaders put forward alternative proposals often called Sovereign Associated Free State. They want Puerto Rico to become a nation but in an association with the United States that would include a guarantee future generations of Puerto Ricans would have U.S. as well as Puerto Rican national citizenship.
Hernandez Colon opposes this nationhood in an association with the U.S. proposal because he contends it would eliminate Federal assistance programs in Puerto Rico (even though the U.S. has continued some of these programs in the three parts of a Pacific islands territory that have become nations in free association with the U.S.).
U.S. Justice OK “Definite”
The former Governor asserted that his new proposal would “Definitely” be approved by the U.S. Department of Justice.
The Federal law for a status plebiscite requires that its options be found by the Department to not conflict with the Constitution, laws, and policies of the U.S.
He did not explain how this could be true as the transfer of powers and exemption obviously conflict with the Constitution, laws, and policies of the U.S., but two of his sons are Gov. Garcia Padilla’s lead representatives to the Federal government. Son Juan Hernandez is Director of the Puerto Rico Federal Affairs administration headquartered in the nation’s capital. Son Jose Hernandez Mayoral is Chairman of the “commonwealth” party’s Federal Affairs Committee.
Jose Hernandez recently admitted to El Nuevo Dia newspaper in Puerto Rico that he had met with U.S. Justice Department officials on the status issue, although he claimed that it was only to oppose a plebiscite on statehood.
U.S. Senators “Mistaken”
Although Hernandez Colon was sure that the U.S. Justice Department would approve his proposal, he held that the new Chairwoman of the U.S. Senate committee with lead jurisdiction over territories matters, Lisa Murkowski (R-Alaska) of the Committee on Energy and Natural Resources, and the senior minority party member of the Committee on Finance, Ron Wyden (D-Oregon), were “mistaken” in finding that there could not be a “commonwealth status” which would exempt Puerto Rico from Congress’ Territory Clause authority under the U.S. Constitution.
He did not note that their conclusion in this regard was the same as that of President Obama’s Task Force on Puerto Rico’s Status or the judgments of the administrations of both Presidents Bush and President Clinton.
Hernandez Colon argued that Murkowski and Wyden were mistaken about the impossibility of a non-territory “commonwealth” status “because they have not thought about the reason for the Commonwealth.” He gave as the reason differences in the economies of the U.S. and Puerto Rico that he said make statehood and nationhood (the statuses of or similar to most of the rest of the world) economically problematic.
Plebiscite Before Statehooders Win
In his interview, Hernandez Colon also called for a plebiscite before the 2016 elections on four proposals: His “improved commonwealth” in addition to statehood, independence, and nationhood in an association with the U.S. that either nation could end.
He has said that the vote should be held during the term of government that ends with 2017 because statehood party candidates are likely to sweep the 2016 elections and try to move the territory towards statehood in 2017.
The statehood party members of both houses of Puerto Rico’s Legislative Assembly have proposed a statehood plebiscite.
Additionally, the territory’s Resident Commissioner in the U.S. House of Representatives, Pedro Pierluisi, who heads the statehood party, proposed statehood legislation in the last Congress that would have required such a vote. 132 other House members and three U.S. senators joined him in sponsoring the bill.
Pierluisi is expected to propose another statehood bill shortly.
Garcia Padilla’s predecessor as “commonwealth” party president, former Puerto Rico House of Representatives Minority Leader Hector Ferrer, has also proposed a plebiscite on statehood. Ferrer said that opposing statehood is the real ideology of the “commonwealth” party.
Statehood Won 2012 Plebiscite
Puerto Ricans rejected territory status (often misleadingly called the current “commonwealth status”)and three-fifths choose statehood among the alternatives in a plebiscite held under Commonwealth law along with the 2012 elections.
The Federal authorization for a plebiscite on an option or options that can resolve the issue of the territory’s ultimate status — an option or options other than territory status — was proposed by the Obama Administration and passed by Congress because Gov. Garcia disputed the results and lobbied against a positive Federal response to the voters’ petition for statehood.
Garcia and many “commonwealth” party leaders supported the territory status in the plebiscite. Some, however, advocated nationhood in an association with the U.S. that either nation could end. It got a third of the vote among the alternatives to territory status.
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Obama Would End Companies Avoiding Tax In Puerto Ricoby Contributing Editor
WOULD LIMIT “COMMONWEALTH” ARGUMENT AGAINST STATEHOOD
Manufacturers based in the States would no longer be able to avoid Federal taxation of income through U.S. territories and foreign countries under a major proposal in President Obama’s budget for the Federal government for the fiscal year beginning October 1st.
Currently, companies can avoid the taxation by establishing separate company subsidiaries in territories and other nations. The 35% corporate income tax is not due unless the parent company receives the earnings from the subsidiary.
The tax avoidance strategy is used by most of the companies based in the States that have manufacturing operations in Puerto Rico.
Their use of it is also the main argument of the “commonwealth” party against statehood for theterritory.
Obama proposed taxing the income at a 19% rate. He also proposed a one-time rate of 14% for earnings that have been kept out of the United States for past years through the first year of the new taxation.
The President, additionally, also proposed lowering the rate on corporate income from the States to 28%.
The 19% rate would be reduced for taxes paid locally and investments in operations such as manufacturing facilities.
Puerto Rico could theoretically be the beneficiary of most of the 19% rate under the Obama proposal but the Commonwealth government has entered into contracts with manufacturing operations that lower its taxation of their income to a few percent at most.
Because the contracts prevent the Commonwealth from increasing the tax, it has also imposed a four percent excise tax on parent company purchases of the products of their subsidiaries. The combined taxation, however, is still far short of the 19%.
Dozens of multi-billion dollar a year manufacturing companies are avoiding billions of dollars a year through ‘foreign’ subsidiaries in Puerto Rico, many actually headquartered in foreign tax havens so they can avoid Commonwealth as well as Federal taxes.
Many increase the much more significant Federal tax avoidance by transferring the patents and brandnames developed in the States that account for much of a product’s value to their subsidiary operating in Puerto Rico to take advantage of the very low tax rates levied by the Commonwealth government on manufacturers from outside the territory.
A U.S. Senate subcommittee found that Microsoft avoided approximately $1.5 billion a year in Federal taxes in this way in each of the years 2009 through 2011. The software giant channeled nearly half of its North American sales through its Puerto Rico subsidiary, which had only a couple of hundred employees in the territory among its tens of thousands in the hemisphere.
The separate Microsoft company in Puerto Rico paid just over one percent of its income in Commonwealth taxes each year. Puerto Rico enacted its four percent tax on parent company purchases of products of insular subsidiaries in 2011, but the minuscule amount of Microsoft’s tax payments to the Commonwealth government and relatively tiny workforce in the territory demonstrate the falsity of the “commonwealth” party claim that the current tax avoidance opportunity for companies is essential to Puerto Rico’s economy.
Microsoft uses Ireland and Singapore for similar tax avoidance. Its effective tax rate in both countries was much higher than in Puerto Rico in 2009 through 2011.
The narrowing of the gap between the current lack of Federal taxation of the income and the current rate of 35% if the income is paid to a parent company to the 19% and 28% Obama-proposed rates would largely eliminate the main “commonwealth” party argument against statehood (equality for Puerto Rico and Puerto Ricans under all Federal laws).
Although the Republican majority Congress will not approve key parts of Democrat Obama’s budget and many of his tax proposals, the proposal to tax corporate income from outside the States is similar to Republican as well as Democratic tax reform plans.
Other Budget Provisions
The tax proposal was the only real news for Puerto Rico in the Obama budget.
An annual list of State, territory, and freely associated state shares of selected programs estimated that Puerto Rico would receive $4.02 billion in Federal Fiscal Year 2016 vs. $3.93 billion this fiscal year.
The increase is smaller than the increase for all jurisdictions but in line with the Commonwealth government’s usual share. That share for Federal Fiscal Year 2016 is .71% of the programs
The share is small compared with what it would be if Puerto Rico were a State and treated equally with the other States in all programs. The territory about 1.1% of the nation’s population.
It also has some 3.4% of the nation’s population under the poverty line. Many programs provide more assistance for low-income communities than for more wealthy ones.
Among the more significant amounts in the budget are the following.
- The Federal contribution to Commonwealth government Medicaid payments for health care for low-income individuals is estimated to decrease from $1,455,663,000 to $1,378,486,000. As a State, Puerto Rico could expect to receive between 50% and 150% more than the Fiscal Year 2016 amount.
- The Nutrition Assistance Program for Puerto Rico, which pays for food for low-income individuals through the Commonwealth government, is budgeted at $1.971 billion compared with $1.951 billion this fiscal year. A State of Puerto Rico would be entitled to about $700 million more.
- Highway construction funding for the Government of Puerto Rico would increase from $131,599,000 to $142,650,000. Equal treatment as a State would provide about a quarter of a billion dollars a year.
- Funding for the territorial government under the largest program for elementary and secondary schools would go up from $418,560,919 to $432,577,177 but still be short of the assistance that Puerto Rico would receive as a State.
- Pell Grants to students for post-secondary education would rise from $863,000,000 to $881,500,000 and loans for post-secondary education students would go up from $589,264,768 to $617,694,869 — but there would be more of this assistance for Puerto Ricans if Puerto Rico were a State instead of a territory.
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A bill to make Puerto Rico a State January 1, 2021 if Puerto Ricans vote for the status again was formally proposed today in the U.S. House of Representatives by a symbolic 51 members.
The territory’s resident commissioner in the House, Pedro Pierluisi, led the 50 others from both national political parties in sponsoring the legislation. Pierluisi heads Puerto Rico’s statehood party as well as is its official representative to the U.S. Government. A dozen other sponsors are members of the Republican majority of the House.
The bill would authorize a vote on statehood before 2018 and require the president of the United States to name a five-member Commission on the Equal Application of Federal Law to Puerto Rico within 90 days if the vote is in favor of the status. Two of the members would have to be from the territory.
The panel’s report would be due July 1, 2018.
Puerto Ricans would elect U.S. senators and House of Representatives members as well as presidential electors in the 2020 elections.
The Commonwealth government would be authorized to use the $2.5 million appropriated by the Federal government a year ago for a vote on an option or options that can resolve the question of the territory’s future status for the bill’s vote on statehood.
In the territory’s first plebiscite on all of its status options held along with its elections in 2012, 54 percent of the vote rejected territory status and 61.2 percent chose statehood among the alternatives.
Because the governor and legislature majorities very narrowly elected at the same time disputed the plebiscite and lobbied against Federal action on its petition for a transition to statehood, the Obama Administration proposed and Congress passed an authorization for a plebiscite under Federal auspices.
The authorization limited the possible options to proposals that do not conflict with the Constitution, laws and policies of the U.S. as determined by the U.S. Department of Justice.
The new governor and legislature majorities from the territory’s “commonwealth status” party had initially objected to the 2012 plebiscite because it did not include their party’s proposal for an unprecedented “commonwealth” status. The “commonwealth” proposal had been rejected by the Obama, George W. Bush, and Clinton Administrations as well as by congressional leaders as beingimpossible for constitutional and other reasons.
After introducing the bill this morning, Pierluisi picked up additional endorsements for the bill from other House members.
Pierluisi led U.S. House and Senate members in sponsoring a somewhat similar bill in the last Congress.
The statehood party members of Puerto Rico’s Legislative Assembly have proposed legislation for a plebiscite on statehood.
Governor Alejandro Garcia Padilla began to lobby against a bill in the new Congress that included a vote on statehood five weeks before the Congress took office less than a month ago.
Party leaders such as former Governor Rafael Hernandez Colon, a major influence on Garcia Padillaon status issues, recently opposed a vote on statehood because Puerto Ricans would vote for the status.
Hernandez Colon also wants a plebiscite before the 2016 elections because he thinks it is likely that statehood party candidates will win most offices then and move the territory towards statehood in 2017.
His plebiscite would include four options — in addition to statehood, his new “commonwealth status” proposal, independence, and nationhood in an association with the U.S. that either nation could end.
The “commonwealth status” party is split between Hernandez Colon’s proposal and the proposal of some other party leaders for nationhood in an association with the U.S. but with U.S. citizenship.
Hernandez Colon’s son, Juan Hernandez, who heads Gov. Garcia’s offices in the States, was quick to oppose the bill introduced by the 51 members of the U.S. House. He charged that it is “exclusionary,” although opponents of statehood would be able to vote against the status as easily as those who want to vote for it.
He also argued that the bill goes against the positions of Obama and Congress, although a vote on statehood is possible under the Federal law enacted last year and although 51 members of Congress sponsored the bill.
Hernandez additionally claimed that Pierluisi does not represent all Puerto Ricans. Pierluisi is their official representative to the Federal government by law — and was the highest vote-getter for any office in the 2012 elections.
A final assertion was that statehood only got 44% of the vote in the 2012 plebiscite. The Puerto Rico Elections Commission continues to report that it won 61.16% of the vote.
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Each State and territory contributes to the U.S. Treasury through taxes paid by their residents. Each State and territory also receives Federal funds. Some get more back than they give, and some pay in more than they receive.
Individual income taxes work that way, too. Some pay more to the government and some get more from the government.
In 2011, The Economist magazine illustrated on a map which jurisdictions were net givers and which were net recipients. on the map, green States gave as more that they received, while red States got more from the government than they put in.
The map showed that Minnesota and New Jersey were more than pulling their own weight and that Arkansas and California gave as good as they got, while Mississippi and New Mexico received more than they put into the kitty.
Puerto Rico and West Virginia joined Mississippi and New Mexico as places that benefited more from the Federal government than they contributed. However, looking at the specific numbers, we see that the territory of Puerto Rico, which has a much lower income per capita than any State and is funded less than the States in some major Federal programs, paid more in taxes than six of the States.
Residents of the territory paid $73.7 billion to the Federal government in taxes Puerto Rico during the years 1990-2009. The following illustrates how the territory stacked up against some States:
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Territory’s Current Status is “very bizarre”
Puerto Ricans should “fight hard” for statehood, Vice President Joseph Biden told White House staff in July 2012.
If they do, “we shall act” to grant “equality,” he declared.
The nation’s second highest elected official also told the group that, “I have always found Puerto Rico’s current political status as something very bizarre.”
The Orlando Sentinel made his remarks public yesterday. There are nearly one million people of Puerto Rican origin in Florida, nearly half in the center of the State, which includes the newspaper’s circulation area.
A recent poll showed that three-fifths advocate statehood for Puerto Rico and four-fifths would be proud if the territory became a State.
The Vice President made his statements in response to a young, temporary staff member from Puerto Rico who is now studying law in Orlando, Phillip Arroyo.
Biden also made the statements four months before Puerto Ricans were to vote on the territory’s political status options.
In the plebiscite held under Commonwealth government law, Puerto Ricans rejected the current status — unincorporated territory of the U.S. but sometimes misleadingly called “commonwealth” after the word in the formal name of the territorial government. The rejection was by a clear majority and statehood was chosen among the alternatives by 61.2%.
The July 2012 statements were not Biden’s first in favor of equality for Puerto Ricans. In the mid-1990s, he said that he favored statehood for the territory after coming to understand Puerto Rico’s situation and having earlier accepted the idea of “commonwealth status” from its leading proponent, then Governor Rafael Hernandez Colon.
He credited then Governor Pedro Rossello with fully explaining the issue in the 1990s and his conversion to be a supporter of statehood.
Puerto Ricans are U.S. citizens, but under the territory’s status, the only voting representation they have in the Federal government, which makes their national laws, is a sole resident commissioner in the U.S. House of Representatives who can only vote in committees to which he or she is assigned.
Additionally, Puerto Ricans and the territory can be treated differently than the States and their residents in Federal programs. They are treated less well in some major programs for healthcare, the elderly, and disabled, and low-income citizens. They are also treated differently in some tax laws.
The Obama Administration supported Puerto Rico’s plebiscite and hailed its results.
The governor very narrowly elected at the same time as the plebiscite, however, lobbied the Congress to not respond positively to the Puerto Rican petition for a transition to statehood.
The “commonwealth” party that the now governor headed had wanted its proposal for an unprecedented “commonwealth status” to be an option in the vote even though it had been rejected by the Obama, George W. Bush, and Clinton Administrations and congressional leaders of both national political parties as impossible for constitutional and other reasons.
Now Governor Alejandro Garcia Padilla also supported the losing current status option in the plebiscite.
Concerned that the Governor’s lobbying would frustrate the self-determination of Puerto Ricans, the Obama White House proposed legislation for another plebiscite but this time under Federal law and U.S. Department of Justice review.
The Justice Department would ensure that the options for the re-vote do not conflict with the U.S. Constitution and basic U.S. policies — as would the “commonwealth” party’s proposal.
Justice Department oversight would also make it more difficult for the party to dispute the results of the re-vote with any credibility.
Led by the Republican House of Representatives, the Congress approved the legislation just over a year ago.
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 Town Hall |
As middle class flees, Puerto Rico tries luring rich people
Town Hall PALMAS DEL MAR, Puerto Rico (AP) — Bond trader Ben Eiler swapped life in suburban Georgia for an island in the Caribbean, and he didn't even have to apply for a visa. The towering 38-year-old native of Arkansas is one of at least 250 people who've ... and more » |
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The issues with Puerto Rico's economy and culture all start and end in Puerto Rico Local The government under Both political parties have utterly failed to bring about the needed Changes to improve increase the islands ...
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Joe Connor was just a few days past his ninth birthday when the news hit on January 24, 1975: His father, Frank, a financial executive, had been killed that afternoon by a bomb blast at a lower Manhattan restaurant. He had taken some out-of-town clients to lunch at Fraunces Tavern - the Revolutionary War-era watering hole, in lower Manhattan, where George Washington bade farewell to his troops - when someone who has never been identified placed a knapsack with a bomb in it just behind Frank's chair.
Joe Connor was just a few days past his ninth birthday when the news hit on January 24, 1975: His father, Frank, a financial executive, had been killed that afternoon by a bomb blast at a lower Manhattan restaurant. He had taken some out-of-town clients to lunch at Fraunces Tavern - the Revolutionary War-era watering hole, in lower Manhattan, where George Washington bade farewell to his troops - when someone who has never been identified placed a knapsack with a bomb in it just behind Frank's chair.
Puerto Rico Gov. Alejandro García Padilla and his administration's policies have been labeled as a "failure" by a non-partisan advocacy organization.
