By Felix A. Montelara
Author: Potential Millionaire
Once thought of as a vacation paradise, the little island of Puerto Rico is now attempting to bring the rich and wealthy to live there- permanently. Earlier this year, the Secretary of Economic Development and Commerce, Alberto Baco Bague, travelled to New York City to explain to rich stock brokers the benefits that Puerto Rico has to offer.
An article on npr.org written by Dan Bobkoff explains the efforts of the Puerto Rican government to entice millionaires: “Under laws enacted in 2012, when someone moves to the island, all of that person’s investment income, like capital gains, dividends and the like — is completely tax-free. Plus, service income — say, a hedge fund’s management fees, is taxed at just 4 percent. And, as it is for all Puerto Rico residents, there’s no federal income tax.” Mr. Bobkoff continues that in order “to take advantage of the tax breaks, the rules say you must live in Puerto Rico at least 183 days a year and prove that you’re really part of the community. Your spouse must live with you, and your kids must go to local schools.”
The government of Puerto Rico is launching this effort in hopes of stimulating the difficult economic situation in this U.S. territory. According to the article, feelings about the breaks given to these new elite are mixed, ranging from ignorance of the new laws to resentment. While bringing the rich to the island is thought to bring more industry, jobs, and opportunities to locals, there is some political danger in treating this new class differently than the local citizenry.
You can view the whole article at http://www.npr.org/2013/06/28/195152925/puerto-rico-rolling-out-the-welcome-mat-for-millionaires (in english).
I would love to have your thoughts about this issue. Do you think this type of tactic is beneficial to Puerto Rico, or any other country or city? How would you feel if you had to pay local taxes and the newly invited rich didn’t? Would it be worth it to economy? Call me or email me your thoughts!
- Tax Heaven For Millionaires – Puerto Rico (potencialmillonario.com)