 PUERTO RICO AND SECTION 936: A COSTLY DEPENDENCETomas Hexner and Glenn Jenkins () No 1995-04, Development Discussion Papers from JDI Executive Programs Abstract: For over 70 years, U.S corporations have been granted tax incentives to operate in U.S territorial possessions, most notably in Puerto Rico. The purpose in so benefiting what have become known as “possessions corporations” is to attract U.S. capital to these developing territories, with the goal of creating jobs. In summary, section 936 has ceased to be an efficient means of attaining employment and attracting producing investments to Puerto Rico and other U.S possessions. While the initial rationale for the credit was the creation of jobs and the stimulation of economic activity in the possessions, the outcome has been far different. Firms with intangible assets now take advantage of transfer pricing laws to maximize profits without making the investments that would create sustainable growth in Puerto Rico. The fundamental questions then are: First, can the long record of disappointment be ended? Second, can the legislation provided in the 1993 budget transform section 936 into an instrument of public benefit, rather than of private profit? We conclude that the costs of section 936 will continue to outweigh its benefits. Keywords: Puerto Rico; investment incentives; private; not public benefits (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:qed:dpaper:119 Access Statistics for this paper More papers in Development Discussion Papers from JDI Executive Programs Contact information at EDIRC. |
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