Reaping the Benefits of Work: A Tax Credit for Low-Income Working Families in Puerto Rico

Puerto Rico has to overhaul its anti-poverty strategy, moving away from programs that create dependency towards programs that promote self- sufficiency.

Current government welfare programs are particularly ill-designed for working poor families. Moreover, regressive excise and Social Security taxes are detrimental to low-income families trying to make ends meet.

An Earned Income Tax Credit Program is a promising route towards improving the standard of living of Puerto Rico’s low-income working families. Such a program would counteract regressive excise taxes as well as other regimes, such as sales and value added taxes. It would also break with dependency by promoting work. In fact, studies for the United States show that the EITC promotes labor force participation, and that it could be more effective than the minimum wage in reducing poverty.