Democrats seek tax relief for Puerto Rico, Virgin Islands

WASHINGTON (AP) — A group of Democratic lawmakers are asking for tax relief for hurricane-stricken Puerto Rico and the U.S. Virgin Islands, saying people and businesses in the two U.S. territories don't enjoy the same benefits as those in the mainland.

The lawmakers are asking Rep. Kevin Brady, R-Texas, head of the tax-writing House Ways and Means Committee, to work on legislation that would, for example, extend the earned income tax credit for low- to moderate-income workers to Puerto Rico and increase the amounts paid under the low-income housing tax credit.

The House last week passed a $36.5 billion disaster aid package for Puerto Rico and the U.S. Virgin Islands. But that relief was "paltry" for the territories' residents "given that they are not able to avail themselves of some of the tax benefits we typically provide," said the lawmakers led by Democratic Reps. Joe Crowley and Nydia Velazquez, both of New York.

The request comes as Congress prepares to craft into legislation a nearly $6 trillion tax overhaul plan pushed by President Donald Trump and GOP leaders. The plan, which Republicans view as an imperative for them to prevail in next year's midterm elections, proposes to nearly double the standard deduction, to $12,000 for individuals and $24,000 for families; dramatically cut taxes for corporations and potentially for individuals; shrink the number of personal income brackets; and simplify the tax system.

The Democratic lawmakers sent a letter Monday to Brady and Rep. Richard Neal of Massachusetts, the top Democrat on the Ways and Means Committee. Their spokesmen didn't have an immediate comment Monday.

The Democrats also asked the panel to provide additional funds for the new markets tax credit to help businesses that were lost in Hurricane Maria. The lawmakers requested the reinstatement of the tax credit for domestic manufacturers in Puerto Rico and its expansion to be applied to the Virgin Islands.

In addition, they are seeking the permanent reinstatement of the tax system for rum, in which the excise taxes collected on rum produced in Puerto Rico and the Virgin Islands was paid to the U.S. government but then transferred back to the territories.

Most residents of Puerto Rico don't have to pay federal personal income tax; they do pay into Social Security. Residents of the U.S. Virgin Islands pay income taxes to the local government that are deemed to be close in amount to what they would pay the federal government.