Tax Breaks For the Wealthy

Morayma ReyesPuerto Rico’s economic down fall has been happening for over a decade now, and with minimal to no sign of improvement the government has introduced tax breaks for visiting US citizens in hopes of reaching an economic recovery. In 2012, PR introduced a law that allows U.S  citizens, who live on the island for over six months, to pay close to no taxes on their income and expenses. A recent study conducted by the Department of Economic Development and Commerce found that a little over 200 private equity and hedge fund moguls have made plans or already moved to Puerto Rico in order to take advantage of this law.

Any person who moves to Puerto Rico is exempt from paying a local or federal tax on capital gains, as well as no taxes will be applied to their salaries. In 1917, the US granted US citizenship to all Puerto Ricans, which allows the islanders to leave for the US for better job opportunities. Between 2005 and 2012 close to 280,000 doctors, engineers and other professionals moved to the US to pursue their careers. With this new law in place, the PR government is trying to lure in a wealthy tier of US citizens in order to increase spending and give their economy a boost. 

Many economists hope that personal and corporate spending, such as buying homes and retail space, as well as other materialistic spending will contribute to the development of the economy. However, many are cautious of this new law, and are questioning the the true value of importing hundreds of millionaires and billionaires in an island that has currently the lowest income per capita in the US. Only time will tell if the introduction of this tax exempt law will have any significant influence on the economy, or if will just further divide the country between the have and have nots.

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