Tax Rules Relating to Puerto Rico Under Present Law And Under Statehood, Independence, And Enhanced Commonwealth Status (S. 712, Puerto Rico Status Referendum Act) : Scheduled for Hearings Before the Senate Committee On Finance On November 14-15, 1989 Jcs

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In addition, as qualified possessions trporations' employees' wages may exceed the income they would herwise earn, employment is increased by the consumption >ending of these employees. Some estimates claim that between le and three additional jobs are created for each employee of a lalified possessions corporation. '^^ The Treasury Department and others argue that the indirect feet of section 936 on Puerto Rican employment is weak, and that itimates showing large effects are flawed on both the...oretical and chnical grounds.*^ In addition, they contend that looking at the amber of workers employed by section 936 companies overstates le effect of section 936 on employment. They maintain that many ' these employees would, in the absence of section 936, be other- ise employed, although perhaps at lower rates of pay.
The efficiency of section 936 as an incentive for economic devel- Dment is in dispute. Proponents assert that section 936 is crucial r attracting capital-intensive manufacturing companies, particu- rly in chemicals and electronics, which have spurred Puerto ican development and led to major increases in employment and ages.


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