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To: ChessExpert

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.


5 posted on 05/14/2016 10:26:29 AM PDT by buwaya
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To: buwaya
Thank you.

The idea that tax cuts are a panacea for every economic problem is simplistic in the extreme.

11 posted on 05/14/2016 10:37:22 AM PDT by who_would_fardels_bear
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To: buwaya

True enough, having a lower tax rate than others provides a competitive advantage.

The US has to compete also. We currently have higher corporate tax rates than many countries.

In general, people and companies try to avoid taxes. This can be done through relocation. If I remember right Bjorn Borg and the Beatles either left their home country, or threatened to over taxes. Companies can incorporate in another state/country, relocate offices, shift work to foreign subsidiaries, subcontract, etc. for various reasons, including reducing the tax bite. Relocation is just one of the ways one can avoid taxes.

What happens if high taxes are inescapable? The American slave had a reputation for being stupid and lazy. The collectivized soviet farm worker had a reputation for being stupid and lazy. In each case, there was little positive incentive to work. I think each demonstrated shrewdness in coping with their respective form of slavery. They put their minds to work, to avoid work. Why do your best for others, if it doesn’t pay?


28 posted on 05/14/2016 12:10:40 PM PDT by ChessExpert (It's not compassion when you use government to give other people's money away.)
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