Posted on 05/14/2016 10:18:41 AM PDT by ChessExpert
The island’s troubles have their origin in an era of corporate tax incentives in the 1970s that exempted firms from paying federal taxes on profits earned in Puerto Rico. This was done to prevent tax-allergic American companies from setting up shop outside the country. Pharmaceutical, textile and electronics companies flocked to the island to spark a manufacturing boom that lasted for around two decades. In 1996, the American government, under the Clinton administration, started weaning Puerto Rico off these tax breaks to offset some of the country’s federal deficit. The largesse disappeared entirely in 2006 and its economy has suffered since.
(Excerpt) Read more at economist.com ...
It is a good example of the boom from supply-side economics, and a good example of the bust that comes when you ignore supply-side economics.
A companion article to address Puerto Rican government spending would be nice. Government can always spend enough to have a deficit, no matter the tax revenue.
The leftists have all moved to one side of the Island, causing it to just about go turtle?
While I agree with you that the economy was booming due to tax cuts and the economy tanked due to the retraction of those tax cuts, the governmental problems have everything to do with out of control spending, unlimited embezzlement by public employees, and of course, the inability of politicians to control their spending once the tax revenues started dropping.
Get Hillary has a $30 billion retraining and recovery plan fir PR miners. /s
Not quite -
Puerto Rico had a massive competitive advantage from tax policy. If this had been uniform policy in the US there would have been only marginal benefits to PR, it would not have anything special to offer.
The fiscal problem in PR is because public spending did not adjust downward following the elimination of the tax exemptions.
My wife of 42 years tells me I'm just a dumbass country boy. Somebody 'splain' to me how giving tax breaks like this would not this benefit the workers with the newfound émigré' companies reap all sorts of benefits?
Could not they then pay their fair share against the collective Puerto Rican sunk cost? Taxes? Did they not consider those? INCOME TAXES - FEDERAL INCOME TAXES. Puerto Ricans on the island proper DO NOT PAY THEM. EXEMPT from them they are I ken.
Puerto Rico’s trouble are due to Climate Change. Everybody knows that.
It was a tax arbitrage induced boom which ceased when the tax advantage went away.
Thas’ what Hank Johnson be sayin’
Puerto Rico’s problems are due largely to Puerto Ricans. If the island had been populated by ethnic chinese, it would look like Hong Kong or Singapore by now.
The idea that tax cuts are a panacea for every economic problem is simplistic in the extreme.
The natural and inevitable result of stupid decisions and stupid behaviors is hard times.
No. We don’t bail out Puerto Rico. That would just allow them to make more stupid decisions and keep having stupid behaviors.
The Puerto Ricans have proven that they make stupid decisions.
They need to live with the consequences of that.
Or,
Move all the Puerto Ricans to Nevada and give the island to the Marines.
Because of ignorant Hispanic culture. Next question.
PR needs to get some Mexican and Spanish advisors?
Example of hand out socialist economics
The ethnic Chinese from Hong Kong and Singapore do not have big asses.
So according to this rag (sadly, the Economist is becoming a left wing rag), the problem was the tax cuts that lead to growth beause the downfall of the economy happened when Clinton got them to get rid of the tax cuts?
Huh?!
Leftism is a mental disorder.
How would importing Mexicans and Spaniards help mitigate the problems of Hispanic culture?
Anyone from New York knows why...
Not to worry. We’ll send them a couple trillion to bail them out.
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