By now I’m sure you’ve heard a lot of polarizing analysis about who the winners and losers of the partisan tax bill will be among the American people.
You’ve heard words like “corporations,” “middle class,” “healthcare,” and “CHIP.”
One side is declaring it the biggest tax cut in generations, while the other is hailing it as the worst bill in congressional history.
Welcome to politics in 2017.
The fact of the matter is that the bill is deeply unpopular. But the other truth is that the long-term impact of the bill is merely speculation at this point. Republican-favored “trickle down economics” rely on the notion that tax cuts to big businesses – coupled with a smaller and more hands-off federal government – will ultimately lead to more jobs, greater wages for workers, and thus more money circulating for everybody.
Keynesian principles favored by Democrats say that greater government spending funded by taxing the rich will better stimulate the economy.
So we’ll see what happens. It will be debated for a while and economists will argue for years to come.
But one thing that’s been overlooked in the bill is the impact it will have on Puerto Rico. Prior to this bill, businesses on the island were able to qualify for both foreign and domestic status in terms of manufacturing and tax rules.
Those stipulations resulted in pharmaceutical manufacturers to incorporate there to gain foreign subsidiaries but still promote their product as made in the U.S.A.
The new tax plan makes it so businesses in Puerto Rico will be treated the same as those operating outside the U.S. Meaning we are basically just treating Puerto Rico like it’s a foreign country.
According to the Food and Drug Administration, Puerto Rico produces more pharmaceutical drugs for the U.S. than any state or foreign country. The FDA estimates that pharmaceutical and medical-device manufacturing accounts for approximately 30 percent of the island’s GDP.
In other words, crippling this industry will devastate Puerto Rico’s economy, which is already in shambles. Basically, we’re kicking the island while it’s down.
As a result, Puerto Rican Governor Ricardo Rossello is now attempting to mobilize Puerto Ricans across the mainland U.S. to vote Republicans out of office in the 2018 election.
As person of half-Puerto Rican descent, I approve of this message.
Again, this is just one aspect of the tax bill that people probably will not hear about. So while we may not know the full ramifications of how this bill will affect the American economy in the long run, we can safely say it will deeply damage our friends across the pond.
Which, in turn, may bode poorly for Republicans in 2018.
For like … 11 months.