• The Star Staff

Governor to sign executive order to extend federal Credit for Work program


By JOHN McPHAUL

jpmcphaul@gmail.com


Gov. Pedro Pierluisi Urrutia announced Sunday that he will be signing an executive order to extend to Puerto Rico residents the provisions of the Credit for Work available in the federal Internal Revenue Code.


The governor said that with the order it will be possible to provide equal treatment under the federal program for American citizens living on the island.


The measure to increase the Puerto Rico government’s Work Credit program with federal funds will have the effect of encouraging work and providing relief to the working class, Pierluisi said.


The governor reiterated his appreciation to the administration of President Joseph Biden and Congress for the approval of the American Rescue Plan, which expanded the Earned Income Tax Credit (EITC) program by some $612 million in additional funding for the program for the next 10 years.


“The complete extension to Puerto Rico of the Credit for Work will have a multiplying effect on our island,” Pierluisi said. “The approval of this measure will allow our taxpayers to receive an economic incentive fully aimed at promoting work. For this government, it is of utmost importance to expand the resources that we have available and that will benefit our citizens.”


The governor added that the measure establishes that the Puerto Rico Treasury Department will take whatever action is necessary to promote effective implementation of the legislation for the 2021 tax cycle.


The legislation explains that, currently, the Puerto Rico Work Credit establishes a tax credit of 10 cents for every dollar of income a family generates, 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 occurs 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 the measure seeks to equalize the benefit granted in the state Work Credit with the federal one.


As a condition of receiving approved federal funds, the Puerto Rico government must make annual payments of over $800 million to EITC recipients.


However, for fiscal year 2019 the credits claimed were estimated at $115 million with a total of 258,000 filers, which is well below the established base amount.


For this reason, it is necessary for the government of Puerto Rico to approve legislation aimed at modifying the local EITC in order to extend work incentives.

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