Puerto Rico Congressman Urges Ways & Means Committee to Explore Modern Tax Incentives to Fuel Economic Development in Puerto Rico

Click HERE to download a broadcast-quality clip.

Click HERE to read the full remarks as submitted to the record.

WASHINGTON, D.C. – Puerto Rico Congressman Pablo José Hernández urged the Ways and Means Committee to consider commonsense legislation, such as the bipartisan Supply Chain Security and Growth Act and the Territorial Economic Recovery Act, to fuel economic development in Puerto Rico.

“Puerto Rico presents a valuable opportunity to help strengthen our supply chain resilience, reduce our reliance on China, and counter Chinese influence in the Americas. Our island combines a skilled workforce, a strategic location, and a special tax status, as Puerto Rico is generally exempt from federal income tax laws. This, along with being part of the U.S., has made us an attractive hub for manufacturing – particularly pharmaceuticals and an emerging air and space industry,” said Hernández.

The Supply Chain Security and Growth Act, sponsored by Congresswoman Nicole Malliotakis (R-N.Y.), aims to reshore critical supply chains to Puerto Rico through tax incentives, reducing American reliance on foreign adversaries like China. Hernández highlighted Puerto Rico’s leadership in pharmaceutical manufacturing, noting that the island contributed 19.3% of the $66 billion in U.S. pharmaceutical exports in 2020. Additionally, in 2022, Puerto Rico’s aerospace industry generated $625 million in annual revenue.

Hernández also called for additional incentives to offset the cost of doing business on the island. He emphasized that Puerto Rico has historically benefited from similar measures, which not only bolstered its economy but also advanced U.S. interests in promoting freedom and democracy in the Caribbean during the Cold War. The phaseout of Section 936, one such incentive, triggered a prolonged economic recession and led to Puerto Rico’s eventual bankruptcy.

The Territorial Economic Recovery Act, sponsored by Congresswoman Stacey Plaskett (D-V.I.), seeks to restore tax incentives to attract investments in U.S. territories, including Puerto Rico. This legislation would treat these investments as domestic rather than foreign and require investors to maintain an active trade or business in a U.S. territory, with a significant portion of income derived from the region.

These bipartisan bills offer practical solutions to drive economic growth in Puerto Rico – creating strong careers for Puerto Ricans, enhancing American security interests, and fostering innovation across the U.S.

###