Puerto Rico’s ‘Tax Haven’ Isn’t Causing Inequality, Its Territorial Status Is
By Cesar Mendez-OteroMay 13, 2021
Recently we have seen a spike in stories about social media influencers and other wealthy Americans moving to Puerto Rico part time to try to “take advantage” of the tax benefits. Some, like Time magazine, have described the island as a “tax haven.” Yet what is being called a tax haven in Puerto Rico are simply local laws that are allowed under the U.S. Constitution to offer incentives in exchange for investing private capital in economic development activities. So why the big fuss?
Some on the left try to argue that Puerto Ricans will “suffer” and that the island will become a more segregated place between rich and poor because of these local incentives laws. But that’s actually just a big distraction because many of those same people are complicit in perpetuating the real inequality problem that Puerto Rico suffers, which started long before the existence of the so-called “tax haven,” its status as an unincorporated territory of the U.S.
Puerto Rico’s status as a territorial possession of the United States has resulted in second-class U.S. citizenship on the island where residents are denied the right to voting representation at the federal level and treated unequally under federal laws and programs. Meanwhile, close to six million Puerto Ricans live with the full rights and equal opportunities in one of the 50 states. The real segregation facing Puerto Ricans is between those with full rights living in the states, and those without citizen equality and federal voting rights on the island.
It is absurd that those who often times oppose statehood or have ignored Puerto Ricans’ second-class status want the government of the territorial colony to sit idly by, without creating sources of local income while agricultural crops are lost and the construction of new infrastructure projects like the Martin Peña Channel are delayed for decades due to Puerto Rico’s lack of power in Congress.
It is easy to criticize the limited options that Puerto Rico’s elected officials have been forced to resort to in order to generate private investment and create jobs, while the unequal status quo persists and is prolonged by those who are enjoying full rights as U.S. citizens living on the mainland. The most egregious example of this hypocrisy are two New Yorkers of Puerto Rican descent, Representatives Nydia Velazquez and Alexandria Ocasio-Cortez, who introduced a bill H.R. 2070, the Puerto Rico Self-Determination Act, which by design would delay any change in Puerto Rico’s status for years, if not indefinitely.
While framing their proposal in the lofty language of “self-determination” they engage in election denial refusing to recognize that Puerto Ricans have already voted on three occasions in the last ten years against the current territory status and for statehood. Claiming to bring about a serious, fair and inclusive process H.R. 2070 opens the door to unconstitutional fantasy options which would spoil any decision and sets no timeline for when their process would end. That is not serious, not fair, and not inclusive of a real solution to Puerto Rico’s territorial inequality.
So while many in the media and prominent members of Congress focus their faux outrage on the supposed “tax haven,” and other second-tier issues like the privatization of the Puerto Rico Electric Power Authority or the environmental cleanup of Vieques, they evade actually dealing with the territorial status which is the real root of inequality in Puerto Rico. I can agree that these issues merit attention and debate, but not at the expense of dealing with the core issue facing island residents, which is Puerto Rico’s ultimate political status.
Anyone who genuinely wants to help Puerto Rico should focus on supporting the will of the majority of island voters who last November said “YES” to full equality and democracy through statehood instead of disenfranchising island voters by putting forward faulty proposed legislation or creating distractions from much less impactful issues.
The Puerto Rico Statehood Admission Act, H.R. 1522, is the only option that respects the will of the majority and empowers Puerto Rico’s voters by formally offering the real choice of equality through statehood. Working together, we can put an end to Puerto Rico’s outdated and undemocratic territory status, improve the opportunities and quality of life for everyone on the island, and in the process strengthen American democracy as a whole.
César Méndez-Otero is the former mayor of the Municipality of Rio Grande. He is an advocate for Puerto Rico statehood and currently serves as President of the Coalition for Rights and Equality. Follow him on Twitter at: @Cesar1665. Related Topics: Cesar Mendez-Otero, Puerto Rico