Section 936 of the Internal Revenue Code

Hurricanes Irma and Maria struck Puerto Rico when its economy was already in a precarious position. Puerto Rico has been in a deep economic recession since 2006, which was brought about by several factors; some of which may be attributed to the phasing out of section 936 of the U.S. Internal Revenue Code, which essentially exempted multinational corporations from paying U.S. corporate income tax on profits from operations in Puerto Rico and other U.S. territories. Since 1996, when legislation phasing out section 936 was enacted, Puerto Rico has lost nearly 90,000 manufacturing jobs. Should Puerto Rico lose another 20,000 manufacturing jobs, its manufacturing base (in terms of jobs) will be near where it was in the 1940s, when the island began to transform into an industrialized society.