Posted on 12/30/2015 11:51:03 AM PST by cll
Chapter 9 would have allowed them to restructure retirement benefits and get rid of the public service unions then put the former union government workers on 401 K plans and participate in their own health care costs.
You want two more Democrat Senators?!?!?
Correct. The Underwriters for that debt on Wall Street knew before the debt was issued that PR would never pay it back. Never.
They were betting on the US Taxpayer bailout.
Fits right in with the America problem. Too much debt caused by corrupt and incompetent politicians.
Let it.
” They will flock to the mainland in droves and screw up the economy and politics of every state where they settle. No thanks.”
They are as American as you and me and can go where they please, as Americans. I’m not sure you understand that.
IF PR became its own country we would not force them to go back to PR.
They are Americans, and you should, at a minimum, respect that, even if you don’t agree with their politics.
Why doesn’t Puerto Rico simply ask Obama for some money?
Because I live there and the current status is partly to blame for the crisis.
I know nothing about their situation. If you don’t mind I would like to know how the status affect them for better or worse. I’m serious. It sounds interesting. I don’t even know what their population or what the status really is. I guess I’ll have to do some research
I know nothing about their situation. If you don’t mind I would like to know how the status affect them for better or worse. I’m serious. It sounds interesting. I don’t even know what their population or what the status really is. I guess I’ll have to do some research
No way.
PR is third world with a lousy “National Anthem” that you will have to suffer through if you go to a ball game there, its about 8 minutes long, and thats after the US one, they sing both.
First time I was there was in October 2001.
San Juan was booming, but the marxist sabotage was done
Maybe these cretins can get their 936 back. Clinton sure did a number on them.
http://taxfoundation.org/blog/tax-policy-helped-create-puerto-rico-s-fiscal-crisis
Tax Policy Helped Create Puerto Ricos Fiscal Crisis
June 30, 2015
By Scott Greenberg, Gavin Ekins
Yesterday, the governor of Puerto Rico announced that his governments $72 billion of debts are not payable, in advance of $1.92 billion in debt service payments due on Wednesday. This announcement follows over a year and a half of uncertainty about Puerto Ricos ability to meet its financial obligations, including a downgrade of its government bonds to junk status and discussions about the possibility of a partial government shutdown.
As waves of shock from the announcement ripple through bond markets and the news media, it is worth reflecting on the role that taxes played in creating the current crisis. The treatment of Puerto Rico in the United States federal tax code helped create the islands current fiscal situation, and the failure of Puerto Ricos government to reform its tax code exacerbated matters further.
I. Section 936 and Puerto Ricos Nine-Year Recession
Throughout the modern economic history of Puerto Rico, one of the central drivers of its economic growth has been the United States tax code. For over eighty years, the federal government granted various tax incentives to U.S. corporations operating in Puerto Rico, in order to spur the industrialization of the island.
Most recently, beginning in 1976, section 936 of the tax code granted U.S. corporations a tax exemption from income originating from U.S. territories.
In addition to section 936, the Puerto Rican corporate tax code gave significant incentives for U.S. corporations to locate subsidiaries on the island. Puerto Rican tax law allowed a subsidiary more the 80% owned by a foreign entity to deduct 100 percent of the dividends paid to its parent. As such, subsidiaries in Puerto Rico had no corporate income tax liability as long as their profits are distributed as dividends.
When section 936 was in effect, U.S. corporations benefited greatly from locating subsidiaries in Puerto Rico. Income generated by these subsidiaries could be paid to U.S. parents as dividends, which were not subject to U.S. corporate income tax under section 936, and were deductible from Puerto Ricos corporate income tax.
Because of these generous tax incentives for business, Puerto Rico grew rapidly throughout the 20th century and developed a substantial manufacturing sector, though it remained relatively poor compared to the U.S. mainland. However, because section 936 made foreign investment in Puerto Rico artificially attractive creating in effect an economic bubble it left the island vulnerable to a crash if the tax provisions were ever to be repealed.
As it happened, section 936 became increasingly unpopular throughout the early 1990s, as many saw it as a way for large corporations to avoid taxes. Ultimately, in 1996, President Clinton signed legislation that phased out section 936 over a ten year period, leaving it to be fully repealed at the beginning of 2006. Without section 936, Puerto Rican subsidiaries of U.S. businesses were subject to the same worldwide corporate income tax as other foreign subsidiary.
The article fails to mention who holds the debt. Hmmm.
I’ll try to explain briefly. If you look at my profile page, there’s a quote from Justice John Harlan, the “Great Dissenter”, from the early 20th century “Insular Cases”. In short, Puerto Rico was deemed by the various Supreme Court decisions as a “non-incorporated territory” of the U.S., a status that didn’t exist untl then, and according to Justice Harlan, something outside of the U.S. Constitution.
Now, throughout the first half of last century, Puerto Rico, wholly under the control of Congress, was granted piecemeal additional rights like U.S. citizenship and certain autonomy, similar to that of the several states. But, since Puerto Rico is not a state, it cannot send a delegation to Congress and its residents cannot vote in presidential elections. That leaves us politically insignificant. It is a de facto colonial status. We live at the whim of Congress without the power to influence its decisions that affect us. We are at a disadvantage when compared to the other states.
How again does this affect our day-to-day lives and our economy? I’ll give you an example. We in Puerto Rico pay full social security taxes, like any other state, yet our social security benefits are capped by Congress. Same tax rate, but unequal return on those taxes. And that’s just an example.
It’s easy to think of Puerto Rico as a foreign land, but, remember, its residents are citizens of the U.S. We have the same conscription requirements as any state, our boys go to the same wars, yet we’re treated as second-class citizens. That is a political and a moral shame.
It will be said here and every thread on Puerto Rico, that we have constantly chosen to remain as is, but that changed in 2012. The current status (so-called Commonwealth), was rejected by a majority of voters in a referendum, and U.S. statehood was chosen as the next step. That, of course, is up to Congress and the several states to accept, but in essence, the current status does not have the consent of the governed.
As to your specific question, Puerto Rico is about the size of Connecticut and its population is 3.5 million. And that is a big part of the problem. Puerto Rico would have more representation and power in Congress than several states, and those states won’t easily give up their share of the power. Same thing that happened to every other territory in the past when they tried to join the Union.
There’s much more to this, of course. E.G., there are many entrenched economic powers vested in the status quo. And then there’s the myth that Puerto Rico would be a solidly Democrat state. All that is holding us back.
Hope this helps. I’ll be happy to answer any other questions.
wow. I knew none of that. and I don’t even want to tell you what I thought the population was. much larger, I thought.
I didn’t know they were citizens.
didn’t know they were conscripted or paid SS.
i’m going to do a little more reading but thanks for all that info.
Gives me a very good idea of the pieces of the puzzle.
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