Posted on 05/09/2017 7:50:08 AM PDT by SeekAndFind
Last week, Puerto Rico took another step in its long, mostly futile attempt to stabilize its economy and budget when it filed for a modified version of municipal bankruptcy. It was the latest chapter in a 20-year struggle that began when an odd coalition of budget hawks, statehood advocates, and critics of corporate giveaways convinced Congress to phase out tax benefits that businesses could garner by locating operations in Puerto Rico.
Since then, efforts to make Puerto Rico’s economy more independent and sustainable have come to little, in part because the 1996 reforms were incomplete, leaving in place tax advantages that encouraged the territory to borrow its way to fiscal oblivion, while requiring local employers to adhere to burdensome U.S. labor market requirements. The result is a floundering economy and a mountain of debt. Now bondholders will be asked to take a big haircut, including some lenders who assumed that Puerto Rico would never be able to enter bankruptcy protection.
In that regard, Puerto Rico’s filing represents not just a problem for its citizens but also another blow to protections that municipal-bond investors once believed that they had—but have seen eroded by a series of high-profile bankruptcies in recent years.
It’s a long, twisted story. Puerto Rico has enjoyed some U.S. tax advantages dating all the way back to 1921, when Congress encouraged businesses to set up operations in American territories. Puerto Rico added its own sweeteners after World War II, and the combination of these incentives sparked an economic surge in the 1950s and 1960s as the island developed a manufacturing base, thanks to new investment. Puerto Rico grew at an exceptional annual rate for a Caribbean economy, and even surpassed U.S. GDP growth. But the cost of the incentives to the U.S. Treasury began rocketing in the 1970s
(Excerpt) Read more at city-journal.org ...
This will play hell with the Muni Market..................
Money
Pit
How deeply involved was the Clinton Foundation in money loaned to that country and its leadership?
Basically, with low corporate taxes the island thrived. With high taxes, the economy collapsed. That shouldn’t surprise anyone.
They call it “eliminating tax incentives”, but in English that is “raising taxes”.
Loan $$$ to Puerto Rico for ‘tax free’ returns.
OOPPPs, no good when they cant pay them back or even the interest.
And minimum wage law set to around the average income means no jobs.(wait, Dems tell us this should mean they all get raises)
No jobs=no money back on loans.
Gosh, remember when people use to roll up their sleeves and work to get themselves out of a problem?
Those were sure great times.
Just wait until the Uniparty makes it our 51st state......
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Basically, with low corporate taxes the island thrived. With high taxes, the economy collapsed. That shouldn’t surprise anyone.
They call it “eliminating tax incentives”, but in English that is “raising taxes”.
>
IMO, incorrect. “Tax incentives” = crony Capitalism, corp/social engineering, picking winners-n-losers, call it what you will. It’s yet another distortion of the Free Market and ‘equal playing field’.
The article had it correct: “...while requiring local employers to adhere to burdensome U.S. labor market requirements...”
In plain English, too much GOVERNMENT.
Course, the Socialist utopia didn’t help matters much either.
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