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SEC. 936: RUNAWAY PLANT PENALTY ADDED TO TAX CREDIT REVISION

Executive Summary

SEC. 936: RUNAWAY PLANT PENALTY ADDED TO TAX CREDIT REVISION by the House Ways & Means Committee at a May 13 markup. In closed session, the committee adopted the Clinton Administration's proposed modification of the tax credit for Puerto Rican subsidiaries to limit the income-based credit to 60% of wages. The committee added an "anti-relocation" provision urged by labor unions and designed to discourage companies from uprooting facilities in the U.S. and relocating on the island to exploit the credit. A summary of the committee's amendments explains that the provision is similar to one established for empowerment (enterprise) zones. During the last congressional session, Rep. Stark (D-Calif.) introduced a measure on runaway plants. Stark's actions were spurred, in part, by American Home Products' shutdown of its Whitehall Labs facility in Elkhart, Ind. after the plant's production was moved to Puerto Rico.
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