Tax reform: another attack on the working class

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By: Rogelio Acevedo

With the recent passage of the labor reform law as well as other measures favored by native and foreign capital, the great inequalities that exist in both the tax system and in how government operations are paid for have resurfaced.  The tax system in the territory, although proclaimed to be progressive (meaning those that have more pay more), is in reality highly regressive (those that have more pay less).  This unequal burden, together with the precarious nature of employment, reflects the super exploitation of the working masses in the territory of Puerto Rico.

Currently, the tax system is built on the backs of the working class through individual income paid through yearly filings of tax returns and a multitude of other taxes.  If we analyze the proposed budget (revenues and expenses) prepared by the colonial Treasury for 2015 – 2016, we can observe that with the exception of three specific taxes, Corporations, non-resident taxes and Foreign Corporations, the majority of revenues are paid by the working class, retirees and the unemployed.

Among the extensive catalogue of taxes that swing against our miserable salaries one finds: income tax, sales and use tax, cigarette tax, alcohol tax, property taxes, and vehicle taxes.  The sum of these reaches $2.8 billion, or 43% of the Net Revenue to the General Fund.  The taxes paid by native and foreign capitalists amount to $2.9 billion, or 44% of the total $6.6 billion Net Revenue General Fund.

Bourgeois economists have justified the current tax system for its supposed “equity” in treating the bourgeoisie and the working class.  However, it is important to point out that the working class does not accumulate profits from capital.  On the contrary, the bourgeoisie pays a minimum portion in taxes and pockets its profits.

The working class, with our miserable salaries, must not only sustain the weight of the State but also subsidize the tax credits to the big businesses for setting up shop in the territory and the “creation of jobs.”

Currently, the “democratic” territory of Puerto Rico ranks 146th in income distribution in the world.  When we analyze the 2010 census, 20% of the population possessed 55% of the total wealth of the territory while the poorest 20% were condemned to live on about $2.000 annually ($6 a day).  Considering this, the opportunist argument that “we all pay equally” appears even more indignant, especially with regressive taxes on sales and use, property, alcohol, and cigarettes among others.  As such, inequality is based just as much on tax burdens as it is on income and the distribution of wealth.

If we connect income inequality to the precarious nature of work, the criminal character of capitalism becomes even more evident.  According to a report by the Labor Department in 2015, there were 380,000 people in Puerto Rico working in precarious conditions and sub-employment, workweeks of under 40 hours.  Another 572,000 work 40 hours a week.  This is a total of 952,000 people.  However, both for those that are sub-employed and full-time within diverse sectors of the private sector, the average salary is roughly $20,000 a year.  The predominant sectors that fall into that category are office workers, administrative support, sales and related jobs, which amount to about 280,000 people.

These figures demonstrate the criminal regime that defines capitalist politics and economics.  The capitalist system imposes the economic burden on the masses of workers, those that produce in the territory of Puerto Rico.  On top of that, this wealth is not enjoyed by the working class but a leisurely minority dedicated to creating conditions of precarious employment that does not satisfy our most pressing needs.  Notwithstanding, the Wall Street Board wants more as one of its demands recently put forth was the need to improve the tax collection system.  In other words, this “improvement” would target precarious and informal workers.  In no way does it attack the tax evasion of local capitalists or foreign corporations.  Rather, it favors new laws to protect them.

It is for this that the working class must organize independently in the form of workers’ councils in order to develop a political struggle against those that oppress us.  Only with the working class in power will it be possible to establish a progressive system of taxation on capitalist profits and build a society that distributes social wealth according to the needs and aspirations of the majority.