Governor Pedro Pierluisi Urrutia announced that he will be filing an Administration measure to extend to Puerto Ricans the provisions of the Labor Credit available in the Federal Internal Revenue Code.
“This will equate the state benefit with the federal benefit to American citizens living on the island,” the statement reads.
Pierluisi noted that, the measure to increase the Puerto Rican government’s Work Credit program with federal funds will have the effect of incentivizing work and providing relief to the working class.
The governor reiterated his gratitude to President Biden’s administration and to Congress for approving the American Rescue Plan, which expanded the EITC Reporting Program (EITC) program in approximately $ 612 million in additional funding for the program for the next 10 years.
“The full extension to Puerto Rico of the Credit for Work will have a multiplier effect on our Island. The approval of this measure will allow our taxpayers to receive an economic incentive fully aimed at encouraging work. For this government it is very important to expand the resources we have available and that benefit our citizens, “said the governor, who added that the measure states that the Puerto Rico Department of Finance will take any action necessary to promote the effective implementation of ‘this legislation for the contributory cycle corresponding to the year 2021.
The piece of legislation explains that, at present, the Puerto Rico Employment Credit establishes a contributory credit of 10 cents for every dollar of income generated by a family, up to $ 15,000, for a married family with two children. However, as a family’s income continues to rise, credit falls until it is finally reduced to zero, which happens when income reaches $ 34,750. Under the existing calculation, the maximum benefit of the Work Credit in Puerto Rico is $ 2,000 per year, so this measure seeks to equate the benefit granted in the State Work Credit with the federal one.
As a condition of receiving approved federal funds, the Puerto Rican government must make annual payments of over $ 800 million to EITC beneficiaries. However, for Fiscal Year 2019 the claimed claims were estimated at $ 115 million with a total of 258,000 taxpayers, which is well below the established base amount. For this reason, the Puerto Rican government needs to pass legislation aimed at amending the local EITC for the purpose of extending labor incentives.