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Old 12-23-2019, 07:31 AM
 
Location: Philly
10,227 posts, read 16,841,645 times
Reputation: 2973

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I think there are two possible reads on this. First, the cause is that people are fleeing high tax NY. Second, they are attempting to legislate for Puerto Rico without being elected to do so. I don't have any insight as to whether it has merit, legally speaking, though I do doubt whether its elimination would have a substantial impact on the island budget since the purpose of the laws is to import capital.

Quote:
“By ‘residing’ on the island for 183 days per year, these individuals now avoid both Federal and local taxes. This results in tax benefits that individuals and businesses could not obtain anywhere else in the world. In other words, Puerto Rico has become a tax haven from the Federal government.”...The letter was signed by Representatives José E. Serrano (D-NY), Nydia M. Velázquez (D-NY), Raúl M. Grijalva(D-AZ) , and Alexandria Ocasio-Cortez (D-NY)....According to a report issued by Puerto Rico’s Department of Economic Development and Trade, 2,202 individuals have moved to Puerto Rico to take advantage of Act 22. Of those, 1,233 were from the United States, including 122 Floridians, more than any other state.

The study found that Act 22 grantees had bought $1.3 billion worth of real estate and planned to make $679 million in capital investments. In addition, the grantees generated an additional $40 million in tax revenue during the life of the incentive....But the lawmakers said the wealthy are receiving breaks not available to all Puerto Ricans and at a time when the island needs the tax revenue..
https://www.miamiherald.com/news/bus...238590978.html

some details
Quote:
Still, Puerto Rico hopes to lure American mainlanders with an income tax of only 4%. Legally avoiding the 37% federal rate and the 13.3% California (or other state) rate sounds pretty good. What’s more, there is no tax on dividends, and no capital gain tax in Puerto Rico...First, forget about easily avoiding U.S. tax on the appreciation in your assets before you move. If you move with appreciated stock, bitcoin or other property, and then sell, all that pre-move appreciation is still subject to U.S. tax. Only your post-move appreciation will be subject to the special tax rules in Puerto Rico. ..In fact, to escape U.S. tax on all of the pre-move appreciation, you generally must wait a full ten years after you move...What about selling your U.S. real estate? That will always be U.S. source income. That means it is fully taxed in the U.S., even if you move to Puerto Rico and wait ten years before selling...There are other fundamentals about the rules too. First, as with any move, you have to actually move! Your tax home—your real home—must be in Puerto Rico. ...After all, if you are later ruled not to be a Puerto Rico resident, the IRS is back in the picture asking for back taxes, penalties and interest.To qualify, an individual must not have been a resident of Puerto Rico within in the last 15 years...Tax-free interest and dividends earned after you become a resident.
No long-term capital gains tax on appreciation after you become a resident.
5% tax on long-term capital gain for appreciation before you move for any sales during your first 10 years as a resident.Puerto Rico also has attractive incentives for business owners. But once again, you actually have to move the company, employees, etc.
https://www.forbes.com/sites/robertw.../#5ccb6c531362

Last edited by pman; 12-23-2019 at 08:47 AM..
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Old 12-23-2019, 06:34 PM
 
Location: On a Long Island in NY
7,800 posts, read 10,119,818 times
Reputation: 7366
Quote:
Originally Posted by pman View Post
I think there are two possible reads on this. First, the cause is that people are fleeing high tax NY. Second, they are attempting to legislate for Puerto Rico without being elected to do so. I don't have any insight as to whether it has merit, legally speaking, though I do doubt whether its elimination would have a substantial impact on the island budget since the purpose of the laws is to import capital.


https://www.miamiherald.com/news/bus...238590978.html

some details

https://www.forbes.com/sites/robertw.../#5ccb6c531362
Actually, Florida is the state with the most residents taking advantage of Puerto Rico's Act 20 and Act 22. Only about half of the people are even American which is something that concerns me. As many as 700 (out of ~2,000) may be Russians or Chinese.

I also have a problem with these legislators imposing their views on Puerto Rico. They are taking advantage of the plenary powers that Congress has over territories and it's the height of colonialism. It seems like everytime I turn around Grijalva and Velázquez are meddling in Puerto Rican affairs. I get that they are personally favorable to the PPD but the PPD lost the election and they need to get over it. It's kind of ironic but the Democrats seem to meddle in Puerto Rican politics far more than the Republicans do. It's a conundrum because Democrats tend to be better for Puerto Rico in terms of advancing the status debate and especially in terms of Federal funding, but at the same time you have many prominent Democrats always sticking their noses in Puerto Rico's state level politics ... especially when the PNP happens to be in power.
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Old 12-24-2019, 02:31 PM
 
Location: Philly
10,227 posts, read 16,841,645 times
Reputation: 2973
It's just frustrating to hear AOC complaining about colonialism on the one hand while practicing it with the other. I'd add that the us track record of fixing places by si.ply providing aid is mixed at best, abysmal at worst.
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Old 12-25-2019, 06:13 PM
 
Location: On a Long Island in NY
7,800 posts, read 10,119,818 times
Reputation: 7366
Quote:
Originally Posted by pman View Post
It's just frustrating to hear AOC complaining about colonialism on the one hand while practicing it with the other. I'd add that the us track record of fixing places by si.ply providing aid is mixed at best, abysmal at worst.
I think that's the liberal in her ... they think they know what's best for Puerto Rico therefore them imposing their positions on Puerto Rico is 'ok'.
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Old 12-25-2019, 08:33 PM
 
9 posts, read 6,734 times
Reputation: 29
PR acts 20/22 makes most sense for indepenent consultants/business owners deriving and receiving active income from outside of PR.
But you have to actually move and really convince NY or CA taxman that you REALLY ACTUALLY MOVED.

Puerto Rico comes with perils of living in a bankrupt island under thread of hurricanes and pressure from liberals and socialists attacking "filthy rich" and conveying benefits of raising taxes to 70% and up to support their hallucionations.
If that to happen - PR acts won't survive.

If the one wants to take advantage of PR territorial taxation - wouldn't it make more strategic sense to move a bit further - to Panama and pay zero taxes of first $100k of your income?

You can become resident of Panama in 6 months and live there and pay less taxes than in PR. If things in US/elections/democrats/socialists/economy/politics/whatnot will get too awry - you can just stay in sunny, nice, inexpensive Panama.
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Old 12-27-2019, 10:12 AM
 
Location: Philly
10,227 posts, read 16,841,645 times
Reputation: 2973
the numbers would indicate that this is a small number of people and money for the US which provide a useful source of capital for the island. that would indicate this is more about dictating policy to the island than solving an actual federal budget problem, or perhaps it is simply meant to cast doubt on the program to limit it's effectiveness. in either case, it seems rather hypocritical.
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