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THE SAN JUAN STAR
Expert Says Congress Has Power To Tax Puerto Rico
Nothing Could Prevent It Under Commonwealth
by Robert Friedman
Star Washington Bureau
December 18, 1998
©Copyright 1998 The San Juan Star
Washington -- Nothing in the current US-Puerto Rico relationship
would prevent Congress from levying federal taxes in Puerto Rico
under commonwealth, the Congressional Research Service's constitutional
expert said Thursday.
"Congress has full powers to tax the US territories and
there is nothing special under commonwealth relationship to stop
it," said John Killian, who often writes opinions for Congress
on Puerto Rico. "Taxation without representation is just
a slogan. There is nothing in the Constitution about it,"
Killian said.
He was asked to comment on the announcement Wednesday that
the House Resources Committee, which has jurisdiction over island
affairs, plans hearings that will focus on the possibility of
applying federal taxes to island residents under a continuing
commonwealth.
Told of the House hearing plans, Popular Democratic Party President
Anibal Acevedo Vila said that "under no condition will we
accept taxes" under commonwealth. The PDP president alluded
to the no-taxation-without-representation call of the American
revolutionaries, but Killian pointed out that the District of
Columbia, which, like Puerto Rico, has no voting representation,
"gets taxed left and right."
Several federal reports have noted that the US government can
apply federal taxes to the island whenever it wants to do so.
A General Accounting Office report earlier this year noted that
while the Internal Revenue Code has different tax rules for US
and Puerto Rico residents, nevertheless, "a person born in
Puerto Rico is typically considered a US person for US tax purposes
and thus is subject to the US Internal Revenue Code." A 1994
CRS report, written by attorney Marie E. Morris, noted that although
Section 9 of the Federal Relations Act says that US internal revenue
laws generally will not apply in Puerto Rico, Congress has imposed
excise taxes on the island in the past and can do so in the future.
Puerto Ricans already pay taxes for such federal programs as
Social Security and unemployment benefits, but they do so because
the island government requested it. Island-produced rum sold in
the states is federally taxed. While most of these taxes are returned
to the commonwealth treasury, the federal treasury keeps some
of it, since it put a cap on the rebate in 1984. Also, Puerto
Rico was to have been federally taxed on cigarette sales in a
proposal approved by the Senate Finance Committee before the congressional
tobacco deal fell through earlier this year.
Reaction was cautious in Congress Thursday about the Resources
Committee plan. House Ways and Means Chairman, Bill Archer, R-Texas,
withheld comment on the idea of taxing the island while it remains
a commonwealth. If such a plan was ever put into effect, it would
have to go through Archer's tax-writing committee.
Spokespersons for Rep. George Miller, D-Calif., ranking Democrat
on the Resources Committee; Patrick Kennedy, D-RI, a committee
member; and Sen. Bob Graham, D-Fla.; a member of the Senate Energy
and natural Resources Committee, all said their bosses would study
the matter but would withhold comment.
Meanwhile attorney Jose Hernandez Mayoral, who is seeking the
PDP resident commissioner candidacy, reportedly accused Resources
Committee Chairman Don Young, R-Alaska and Rep. Dan Burton, R-Ind.
-- both of whom are suggesting federal taxation under commonwealth
-- as being in cahoots with Gov. Rossello and Resident Commissioner
Carlos Romero Barcelo on the tax issue, as part of a pro-statehood
plan to dismantle commonwealth.
But observers say a "trend" may be building here
to get Puerto Rico to contribute to the federal treasury. They
note, among other things, that this year Congress stopped treating
the island like a state for road building funds, which meant less
of an increase than given to the 50 states.
The balanced budget effort has sparked federal officials here
to ask why the island is receiving some $10 billion yearly in
federal funds without contributing to the federal treasury, said
one source.
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