Manufacturing

Former U.S. Secretary of State Colin Powell said, “Good leaders delegate and empower others liberally, but they pay attention to details, every day.” A leader who served as the top military officer in the nation and then the top diplomat, recognized the importance of details in the formation of the big picture.

The big picture right now is the U.S. economy. The big picture is the nation’s capacity and preparedness in the face of situations such as COVID-19. The big picture is the political and social transformation that is occurring in the country right now.

The “details” are the small policy changes that will occur across the nation that will secure the evolution of our nation and ensure our ability and agility in protecting ourselves from situations such as COVID-19 while we move our society forward. Here, in Puerto Rico, the “details” are the legislation of manufacturing incentives to ensure that companies see us as a site for potential investment.

Recently, U.S. Sen. Roger Wicker introduced S 3940, a companion bill to U.S. Rep. Stacey Plaskett’s bill HR 6648, to foster manufacturing operations in U.S. territories. Both bills would exempt manufacturers from the GILTI rules, providing a beneficial structure that would incentivize companies to manufacture in U.S. territories.

GILTI rules currently impose a penalty for U.S. companies operating in low taxed foreign jurisdictions by taxing global intangible income. Without GILTI, this income would not be subject to U.S. taxes.

Section 936 on the other hand provided a significant tax credit on otherwise U.S. source income generated by a U.S. company and subject to U.S. taxes.

Both tax provisions provide credits, in different ways. GILTI rules penalize a manufacturer in Puerto Rico by treating the island as a foreign jurisdiction, whereas Section 936 provided an incentive. The GILTI rules do not apply to manufacturers operating in other states. S 3940 and HR 6648 are not another Section 936, plain and simple.

The Plaskett/Wicker bills aim to move drug manufacturing back to the U.S. by establishing an ideal environment for the development of innovative drugs.

On the other hand, HR 6443, a bill introduced by Resident Commissioner Jenniffer González provides tax credits in economically distressed zones. It sounds like a productive bill, but in reality, it would do very little to attract the manufacturers of innovative drugs that invest significant amounts in research.

That research turns into an intangible asset, the formula that is patented to market leading drugs. Without an incentive that allows that manufacturer to conduct that type of manufacturing on the island without being impacted by unsustainable costs, the math just doesn’t add up. The investment to produce a drug is much larger than the bill considers and is also not sufficiently beneficial to generics manufacturers that are already operating efficiently around the world and do not have a need to relocate operations.

It would be policy blind, socially insensitive and economy foolish to fail to look at this legislation through anything other than the lens of current events throughout the nation.

In a moment when the United States is fighting a pandemic and millions of minorities are standing up to systemic discrimination, it’s clear that there is something happening here—in the words of Bob Dylan “the times, they’re a changing.” As someone who has always favored statehood, it seems untimely and insensitive to continue to use the Anti-Statehood Boogie Man in the face of all of this.

While all of this is happening on Capitol Hill, the Trump administration continues to pander to the masses, by promising a return to the glory days of American manufacturing, which we have yet to see. The Trump administration is in trouble and recent polls suggest that former Vice President Joe Biden could take the White House, by a thin margin, a comfortable margin or a landslide—it all depends who you ask.

However, most experts believe he is the front-runner. And the fact of the matter is that it has been the Biden camp that has actually proposed concrete policy steps to boost manufacturing in the U.S.

Biden’s platform embraces the manufacturing sector and plans to quadruple funding to benefit small manufacturing in a global economy, boosting access to new technologies to develop low-carbon manufacturing in every state, encouraging innovation, investing in infrastructure and increasing our middle class. So, it begs the question, how are the island’s political leaders working with Biden to ensure we are a part of his plan?

It’s obvious that the creation of manufacturing jobs is a priority in Washington. Our leaders can either get with the program and ensure the island’s role in U.S. manufacturing, or continue to offer false hopes while they ignore what is happening in Washington.

If we want to see a change in Puerto Rico, we must be that change. We can’t continue to live in “what if” land. We can’t continue destroying the futures of young Puerto Ricans by stalling everything else to focus on our political status.

Bob Dylan said it right: “Come Senators, Congressmen please heed the call. Don’t stand in the doorway don’t block up the hall, for he that gets hurt will be he who has stalled. There’s a battle outside and it is ragin’, it’ll soon shake your windows and rattle your walls. For the times… they are a-changin.”

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