The article "Losing Jobs to 936" by Katherine Isaac (July/August 1993) drew two letters of criticism which unfairly characterized the position of my organization which represented thousands of mainland workers whose jobs were destroyed by Section 936.
These writers compare the transfer of jobs from the U.S. mainland to Puerto Rico as qualitatively similar to the transfer of jobs from Massachusetts to Michigan or the District of Columbia. The Multinational Monitor, and by extension, the Oil, Chemical and Atomic Workers Union (OCAW), are accused of "blaming [Puerto Ricans] for doing exactly what the states on the mainland do to each other."
Unlike states, Puerto Rico is its own taxing jurisdiction. Residents and corporations of Puerto Rico pay no federal taxes, but instead pay a similar level of taxes to the Commonwealth government (currently about 36 percent on corporate income). Section 936, which exempts corporate income that is repatriated from Puerto Rico is given meaning only after Puerto Rico first exempts corporate income locally. The net result is that Puerto Rico, as a part of the United States, is effectively able to waive all federal taxes on corporations within its borders.
States on the other hand, do not have this ability. In fact, it is unconstitutional for states to be treated differently from the standpoint of federal taxes. Thus, it is impossible for any state to "waive" federal taxes on businesses within its borders. In the corporate-inspired scramble for jobs among regions, individual states (and territories like Puerto Rico) will waive property and/or local income taxes, provide free land and grant other incentives. But all of these subsidies, when taken together, don't amount to a third of what Puerto Rico is able to provide by waiving federal taxes. Thus, we arrive at a situation where is would be cheaper by a magnitude for mainland taxpayers to simply pay the wages of 100,000 Puerto Rican workers (perhaps as reparations) than to continue paying an enormous premium to corporate profiteers and environmental vandals to make these transfers.
The OCAW deplores the corporate-inspired slugfest between states for jobs and opposes this regional warfare wherever it has existed. The advantages extracted by businesses in Puerto Rico are of an entirely different character, however. First, they dwarf any that could ever be legally offered by any state. And second, they are financed almost entirely by the victims; mainland working class taxpayers who have in the past coughed up the $3 billion annual cost for this corporate free ride.
This is not the first time U.S. unions have been accused of "blaming Puerto Rican workers" or "picking on Puerto Rico." Mouthpieces for the 936 companies initiated these attacks three years ago in an effort to split mainland and Puerto Rican workers. In 1990, former resident commissioner Jaime Fuster proclaimed that OCAW-sponsored legislation had "the appearance of discriminating against U.S. workers of Hispanic origin."
These are the very same elements that recently inundated the East Coast and the U.S. Congress with threats of a mass immigration of Puerto Ricans if Section 936 were tampered with. Exploiting sensitivities within the Hispanic community and pandering to racist tendencies on the mainland should be exposed and cut off at the knees wherever it exists. And charges of racism (no matter how carefully worded) against groups of workers, many of whom are members of racial minority groups themselves, should be carefully examined in this light.
Corporate giveaways need to be exposed and challenged wherever they exist. In the case of Section 936, this "mother of all tax giveaways" has exacted an enormous toll on mainland workers. In an effort to end this abuse, OCAW has proposed many solutions (as mentioned in the original article), none of which jeopardized Puerto Rican job growth and wage levels.
- Richard Leonard
Director, Special Projects
Oil, Chemical and Atomic Workers International Union
In response to letters criticizing my article "Losing Jobs to 936" (July/August 1993), I cannot see how Section 936 could be construed as correcting, even in part, "the dislocation caused by nearly one hundred years of colonialism imposed on the Puerto Ricans by the imperialist practices of the United States ..." when it is corporations that reap the benefits. The article in no way pits "worker against worker" but rather points out that corporate power continues to grow unabated, sanctioned by the U.S. government - the same government that continually shows that it favors corporations over workers, whether they live in Indiana, Tennessee or Puerto Rico. If the authors of the letter to the editors (Multinational Monitor, November 1993) want reparations or jobs programs for U.S. citizens living in Puerto Rico, why not work for policies that benefit workers not corporations?
- Katherine Isaac