Mainland U.S. residents who will not be Puerto Rican not often take note of the politics of the island. If there’s a hurricane, or another pure catastrophe there, media will cowl it, however quickly sufficient, the protection fades.
So it’s as much as us “not-Boricuas” to concentrate and converse out towards insurance policies and legal guidelines which might be negatively impacting Puerto Ricans. We should be part of their voices and amplify their cries for justice.
One key legislation enacted in Puerto Rico that’s having a disastrous impression on Puerto Rican islanders is Act 22, which is now part of Act 60. Puerto Ricans want our assist to get this tax haven rip-off repealed by the U.S. Congress, the place they solely have a nonvoting consultant.
RELATED STORY: The rich given outrageous incentives to colonize Puerto Rico whereas native residents undergo
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Again in November, Alberto Medina, president of Boricuas Unidos en la Diáspora, wrote an opinion piece about Act 22/60 for The Hill.
Tax cheats are making the most of Puerto Rico — the US authorities can cease them
Hundreds of ultrarich people are in Puerto Rico due to Act 22 (now folded right into a broader legislation generally known as Act 60), a neighborhood legislation that enables non-Puerto Ricans to pay zero tax on passive earnings from curiosity and dividends or capital positive aspects. The speculation was that these people would make investments, create jobs and assist prop up a Puerto Rican financial system within the midst of a decades-long disaster regardless of the legislation having no precise funding or job creation necessities.
The fact has been far completely different.
An in-depth examine by Puerto Rico’s Heart for Investigative Journalism discovered that the tax incentives have didn’t spur significant financial development. As a substitute, they’re exacerbating Puerto Rico’s financial troubles. The housing disaster on the island that started after Hurricane Maria has additionally accelerated as Act 22 beneficiaries displaced locals to amass properties, driving up dwelling costs.
Puerto Ricans, who can’t sustain with the shopping for energy of those tax-evading millionaires, more and more discover themselves with out entry to housing. The downstream results are troubling; for instance, Puerto Rican nonprofits not too long ago introduced that they’re having hassle discovering transitional housing for home violence survivors.
And as Each day Kos famous in December 2021:
A variety of these rich buyers are actually residing it up on the luxurious seashores of Puerto Rico with the express goal of avoiding their very own taxes, whereas turning one of the best actual property of the island into their very own private playgrounds.
John Paulson, a hedge fund billionaire, introduced he was transferring to Puerto Rico at a convention in Manhattan, and was blunt as to why: “It is the one place a U.S. citizen can go and actually keep away from, legally, all their taxes.”
Mark Gold, founding father of the closely investigated Ticket Clinic, put it this manner at a Cocktails and Compliance occasion that new rich residents throw for themselves yearly:
“I used to be taking a look at completely different tax havens. Andorra, Lichtenstein, Monaco. However the issue is, it’s important to hand over your U.S. passport,” Gold advised partygoers.
“After I heard about this, it was too good to be true. However it’s actual. I reside in paradise. I reside on the Ritz-Carlton. I drive my golf cart to the seaside membership for breakfast. Then I’m going to my sundown yoga class on the seaside.”
Critics of the acts level out the island continues to be, nearly 10 years later, mired in poverty and unemployment. In the meantime, the inequality hole has exploded. Puerto Rico now has the very best inequality hole in the USA, which is saying lots for the reason that U.S. already has the very best earnings inequality within the Western world. Economically struggling native Puerto Ricans are justifiably furious that they aren’t being exempted from any tax burden whereas they’re basically being compelled to subsidize their new super-wealthy neighbors.
For an in-depth look into the harm to Puerto Ricans underneath the continuation of the act, Shedding Puerto Rico—described as “a media challenge aimed to broaden the narratives across the a number of crises dealing with Puerto Rico and Boricuas by inviting motion focused in direction of those that have energy to make speedy change”—has an awesome sequence of movies explaining the historical past and its impression.
Shedding Puerto Rico is a video challenge aimed to teach, encourage and activate Boricuas in Puerto Rico and within the diaspora – in addition to activists on the mainland United States. Lots of the crises Puerto Rico faces will not be new and are a manifestation of root points inflicted on the island by the USA authorities.
The most up-to-date video is just 5 minutes lengthy. Please take the time to observe it.
The video additionally has informative, detailed video notes, shared in full with permission.
Do you know that rich individuals are capable of evade most taxes in the event that they transfer to Puerto Rico? Do you know Puerto Rico is the one place on the earth the place Individuals can transfer and never pay federal earnings taxes, with out giving up their US passports? Is your group or state being disadvantaged of tax {dollars} to fund public providers whereas these millionaires get to pack up and go away to reside tax free within the Caribbean? Is that this hurting or serving to native communities in Puerto Rico? Have you ever heard of Puerto Rico’s displacement and the way this has made it a lot tougher to rebuild after historic pure disasters and monetary disaster? Had been you conscious that crypto buyers are exploiting Puerto Rico and making it a lot tougher for common Puerto Ricans to reside in their very own island nation? As a US colony, Puerto Rico is already at an obstacle – wealthy outsiders from the states are making it that a lot tougher.
Why this impacts me?
In case you reside in one of many 50 states or Washington, DC, wealthy folks out of your group could also be transferring to Puerto Rico to take advantage of extraordinary tax loopholes – the place they can’t solely evade most US taxes, however Puerto Rican taxes as effectively. When the wealthy transfer their residence to tax havens, they deprive your state and native authorities of the tax revenues wanted on your public providers. Sarcastically, the bankrupt US territory of Puerto Rico can also be disadvantaged of important providers underneath this scheme. In case you are a boricua* within the diaspora and have family members on the island, likelihood is they reside in communities the place many are being priced out by outsiders not paying their fair proportion.
What is occurring and who’s in charge?
Wealthy outsiders from the US are transferring to Puerto Rico and inflicting the displacement of Puerto Ricans because of tax loopholes not out there to Individuals wherever else on the planet. One explicit loophole, PR Act 22, is just out there to outsiders, not native Puerto Ricans. You’ll have seen the crypto group advocating to maneuver to Puerto Rico for tax breaks by means of well-known influencers like Logan Paul. Locals have voiced outrage at their audacious evangelizing, labeling them “crypto colonizers.”
What does change appear like?
Our objective is to repeal the Puerto Rican legislation that invitations Individuals to maneuver to the island and pay zero US federal earnings taxes and near zero Puerto Rican taxes. The repeal can occur if Congress decides to not enable Individuals that transfer to the island to keep away from paying federal taxes, or if the Puerto Rican legislature passes a legislation revoking Act 22 (now a part of Act 60).
Background on displacement disaster
Puerto Rico has been struggling an financial disaster since 2006 that, together with a sequence of pure disasters of epic proportions, have destroyed the island’s infrastructure and triggered huge migration. Greater than 200,000 Puerto Ricans have left the island. And a scarcity of jobs, housing insecurity, elevated value of residing and tough every day life because of an vitality disaster, have made regular life nearly not possible.
The Trigger
In 2011, Act 22 was enacted to draw buyers to Puerto Rico, hailed as a option to reinvigorate the island which was coping with a number of crises. However it has had the alternative impact, inflicting a disaster of displacement. Act 22 permits anybody who has not lived in Puerto Rico for seven years to maneuver to the island and pay ZERO American earnings taxes and near ZERO Puerto Rican taxes. They solely should reside there a part of the 12 months and purchase a residence. This has attracted millionaires and billionaires searching for to evade taxes. The end result: skyrocketing lease and property values that make it not possible for a lot of boricuas to reside in their very own island-nation. And Puerto Rico is vulnerable to shedding its identification and tradition to outsiders with no connection to the island.
Final 12 months, Shedding Puerto Rico regarded into the false guarantees made to Puerto Ricans by crypto-tycoons like Brock Pierce, in a video clocking underneath six minutes.
In November 2023, New York Rep. Nydia Velázquez and a dozen of her Home colleagues issued a scathing press launch about Act 22.
Velázquez Leads 12 Members Requesting Data on Act 22 Tax Evaders in Puerto Rico
As we speak, Rep. Nydia M. Velázquez (D-NY) led 12 members in sending a letter to the Inner Income Service (IRS) elevating considerations a few Puerto Rico legislation that’s enabling tax evasion by the American rich, and asking the IRS to expedite a Freedom of Data Act (FOIA) request submitted by a coalition of Puerto Rican and U.S advocacy teams concerning the company’s efforts to establish and deal with noncompliance with this legislation.
Puerto Rico’s Act 22 (now a part of Act 60 of 2019) seeks to draw rich foreigners and mainlanders to Puerto Rico by providing beneficiant tax-related advantages. As an illustration, beneficiaries do not need to pay federal earnings taxes on PR-source earnings and might keep away from paying any taxes on pursuits, dividends, and capital positive aspects.
In 2021, the IRS initiated a marketing campaign towards Act 22 beneficiaries centered on U.S. taxpayers who might have inaccurately claimed advantages with out assembly the legislation residency necessities. Nonetheless, the IRS has not launched detailed info to the general public concerning these efforts.
Because the legislation’s enactment in 2012, over 5,000 rich people have relocated to Puerto Rico, primarily from the USA. Analysis has discovered that money property gross sales have grown exponentially, and short-term leases have quickly expanded, elevating the costs of median lease and median housing models, and making a housing scarcity for locals.
This wasn’t the primary time Velázquez took on Act 22.
From the Shedding Puerto Rico web site:
Washington Has the Energy to Repair This.
The PROMESA federal legislation handed in 2016 gave Congress the facility to override monetary lawmaking choices made by the island’s elected leaders. Congress additionally has the facility to supervise the LUMA contract and take the federal reconstruction {dollars} away from LUMA and provides them again to the native communities that may higher spend it.
So, Congress has the final word energy to determine who will get away with not paying federal taxes in Puerto Rico. And guess what? The US legislation – which was supposedly meant to assist Puerto Ricans, is definitely simply serving to wealthy outsiders evade taxes. Worse, it’s driving up the price of residing and making a homeland uninhabitable to Puerto Ricans. Congress wants to shut this loophole, instantly – or else Puerto Ricans are vulnerable to shedding Puerto Rico.
What can we do, you ask, as readers of a website offering “information you are able to do one thing about?”
Signal this petition. Ask your Home rep and senator the place they stand on this problem, and push them to help it. Comply with teams on social media who’re utilizing the hashtag #AbolishAct22. Unfold the phrase by sharing the movies from Shedding Puerto Rico.
Thanks.
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