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{
    "localId": "1554456",
    "label": "Puerto Rico - Compact of Permanent Union, November 7, 1975",
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{
    "id": "1554456",
    "sourceUrl": "https://catalog.archives.gov/id/1554456",
    "contentType": "document",
    "title": "Puerto Rico - Compact of Permanent Union, November 7, 1975",
    "citationUrl": "https://catalog.archives.gov/id/1554456",
    "collections": [
        "White House Special Files Unit Files",
        "Issue Decision Papers for the President"
    ],
    "subjects": [
        "Puerto Rico",
        "Intergovernmental relations",
        "Territories and possessions"
    ],
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        "day": 14,
        "logicalDate": "1976-01-14",
        "month": 1,
        "year": 1976
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        "logicalDate": "1975-10-01",
        "month": 10,
        "year": 1975
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{
    "seq": 44,
    "pageIndex": 0,
    "type": "photo",
    "url": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0010/569572/1554456/1554456_Page_45_Image_0001.jpg",
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    "ocrText": "- 4 -\ntax on such amounts a credit would have to be allowed by the United\nStates for the Puerto Rican tax imposed on the same income.\nUnder present law, Federal, income tax is imposed on the U.S. -,\nand foreign-source income of Puerto Rican residents, but Puerto Rican-\nsource income is excluded from gross income under section 933 of the\nCode where the taxpayer is a \"bona fide resident' of Puerto Rico.\nThe U.S. - and foreign-source income of Puerto Rican residents is\nalso subject to Puerto Rican income tax, but Puerto Rico allows a\nforeign tax credit for the U.S. tax imposed on such income. 26 P.R.L.A.\n§ 3131(b)(2) The proposed Compact would thus retain the first rule\nbut change the foreign tax credit rules.\nThe Department would have no objection to a rule which required\nthe United States to grant a foreign tax credit for the Puerto Rican\nincome tax imposed on foreign-source income, because that is the\nrule which would be in effect under Federal law if Puerto Rico did not\nallow a tax credit, for Puerto Rican purposes, for the U.S. tax\nimposed on such income. The Department would object, however, if the\nUnited States were to be required to give a foreign tax credit for\nthe Puerto Rican tax imposed on I.S.-source income. At the present\ntime, most U.S.-source income received by Puerto Rican residents\nescapes: U.S. tax anyway, because Puerto Rican residents are entitled\nto claim the standard deduction, personal exemptions for all\ndependents, and if married to file a joint return with respect to\nU.S. - and foreign-source income subject to U.S. tax. The amount of\nadditional tax that Puerto Rico would collect if such a change were\ninstituted, moreover, would be only about $7 million annually. If\nthe United States were to agree to such a rule, however, there might\nbe pressure to grant similar rights to foreign countries in our\nincome tax treaties.\n4. Section 933 of the Code exempts from taxation income derived\nfrom Puerto Rican sources by an individual resident there only if he\nwas a Puerto Rican resident for his entire taxable year (or if he\nhad been such a resident for the 2 years preceding his change of\nresidence from Puerto Rico). Section 4(b) has no similar requirement\nof residence for the entire year."
}