The ‘Compact’ is the ‘Big Lie’

Caribbean Business CARLOS ROMERO BARCELÓ From the time the Constitution of the Commonwealth of Puerto Rico was enacted, amended and approved by Congress and put into effect in 1952, the leaders of the Popular Party have been misinterpreting and twisting the meaning and result of what was approved. The biggest lie of all is the claim that by virtue of Public Law 600, passed in 1950, and Public Law 447 of 1952, a bilateral compact was established and Puerto Rico achieved a full measure of local government. That is the No. 1 lie, not only to the people of Puerto Rico but to the world and the United Nations as well. If it were true that Puerto Rico had achieved a full measure of local self-government, it would mean we wouldn’t be subject to labor laws, health and sanitation laws, transportation laws, commercial laws, banking laws, housing laws, communications, tax laws, criminal laws, environmental laws and others that weren’t approved by our own local Legislature. That is, we wouldn’t be subject to federal laws enacted without our participation. We know we are subject to all laws approved by Congress unless specifically excluded by Congress itself. All federal laws are enacted without our participation, yet we must abide by them. As a matter of law and of fact, the U.S. Constitution and federal laws not only are enforceable, but if a discrepancy or difference exists between a federal law and our local constitution or a local law, the federal law prevails. The second (No. 2) big lie has been to allege we became fully autonomous in tax matters and Congress couldn’t impose any taxes on us without our consent. Particularly, they couldn’t impose a federal income tax on us. To support their claim of irrevocable local tax sovereignty, they would cite Sections 901 and 936 of the Internal Revenue Code. Their claim to full local tax autonomy has never been supported by any bilateral compact, but by sections of the Internal Revenue Code, which could be and have been repealed and amended without our consent. As a matter of fact, the tax credits, which in effect granted full income-tax exemption to corporations or their subsidiaries operating in Puerto Rico, were eliminated in 2006 and they now have to pay federal taxes on income earned in Puerto Rico. To be able to take advantage of the available income-tax credits, they have to reorganize themselves as Foreign Corporations. The Internal Revenue Code identifies Puerto Rico as a “possession” and grants tax credits to all corporations organized in U.S. “possessions,” which includes the U.S. Virgin Islands, Guam and Samoa, none which are commonwealths. This year, under President Obama, Congress is considering eliminating the Foreign Corporation Tax Credits. The government of Puerto Rico is now lobbying to convince Congress not to eliminate the Foreign Corporations Tax Credit in Puerto Rico and the other U.S. territories. Obviously, there is no tax autonomy as alleged by the Popular Party leaders and their lawyers, accountants and financial analysts. If Congress wanted to impose federal income taxes on us, now they have the constitutional and legal authority to do so. However, if they did so, then we would be entitled to parity in all federal programs. Puerto Rico would gain billions of dollars in Medicaid, Medicare, education and many other federal programs where we now aren’t treated as a state. The main reason why Congress shies away from imposing income taxes on us is because of the revolutionary tenet of no taxation without representation. However, we do pay the Social Security tax, Medicare premiums, unemployment-benefit taxes, federal excise taxes and federal import duties. Obviously, we don’t have any fiscal autonomy and, if Congress wanted to, it has the authority to impose federal income taxes on all Puerto Rico residents and corporations. The third (No. 3) big lie, which the Popular Party leaders continuously fed the people, particularly its staunchest defenders, the tax-exempt companies, was that Puerto Rico was fully autonomous and had full authority to control minimum wages and that federal minimum wages couldn’t be put into effect in Puerto Rico without our express consent. Muñoz Marín and his cohorts instilled fear of federal minimum wages so effectively that even unions were afraid of having federal minimum wages imposed on Puerto Rico because the result would be massive unemployment. In the early seventies, as mayor of San Juan, I was able to convince the Senate Labor Committee Chairman Harrison Williams (D-N.J.) that Puerto Rico workers were being exploited. I explained to him that we lived in the same economic system as all of the 50 states and that our cost of living was higher than any state except Alaska and maybe Hawaii. Yet, our workers were being paid as little as $1.00 an hour in factories, which paid no less than $3.25 an hour, the then-federal minimum wage in the States. Sen. Williams understood, filed and obtained enactment of a law that established a schedule to bring Puerto Rico up to the federal minimum wage in several years. As a result, another big lie about the so-called full measure of local self-government in minimum wages had been unmasked. The fourth (No. 4) big lie is the name given to the Commonwealth in Spanish, “Estado Libre Asociado.” We are neither a state, nor are we politically “free” nor are we associated to the U.S. We are a “territory” of the U.S. which, from the beginning of the century, the U.S. Supreme Court called a “nonincorporated territory.” Although some people, including lawyers, professors and other professionals still insist on denying that Puerto Rico is a U.S. territory, the vast majority of the people of Puerto Rico today acknowledge the island is a territory and we can’t continue to accept such a relationship any longer. The majority of the people today are clear that we must achieve equality through full sovereignty as a republic or through shared sovereignty as a full-fledged partner with the 50 states of the union. The fifth (No. 5) lie has been that if we want to be a state, we will no longer be allowed to use Spanish as an official language. In the first place, we have the precedents of New Mexico and Hawaii. In New Mexico, where the percentage of the population who spoke Spanish as a first language was much smaller than the percentage who speak Spanish as a first language in Puerto Rico, the state constitution establishes that Spanish and English are both official languages. In Hawaii, both English and Hawaiian are official languages. More and more, Spanish is spoken all over the U.S. In cities such as Miami; Orlando, Fla.; San Antonio; El Paso, Texas; Los Angeles; New York; and others, both Spanish and English are spoken. In North, Central and South America, the two languages spoken by the majority are Spanish and English. No matter what status solution we choose, it is to our advantage to be bilingual. To think otherwise is to go backward and limit our opportunities. Finally, if we wish to really honor our “Commonwealth Constitution,” we must repeat to ourselves the words in the preamble, which declare: “The democratic system is fundamental to the life of the Puerto Rican community.” The beginning of the last paragraph of the preamble, which declares: “We consider as determining factors in our life, our citizenship of the United States of America and our aspiration continually to enrich our democratic heritage in the individual and collective enjoyment of its rights and privileges.” Yes, we have a serious deficit in our democracy in Puerto Rico. The most serious of all, our disenfranchisement in the presidential and congressional elections and the consequent lack of representation in our nation’s Congress. Let’s get going and let’s solve this deficit as well..