Commonwealth of Puerto Rico Got Itself into this Mess – The Wall Street Journal (Aug. 20, 2015)

With reference to Joseph Stiglitz and Mark Medish’s “What the United States Owes Puerto Rico,” op-ed, Aug 14):

Hawaii is also subject to the Jones Act but has one of the lowest unemployment rates in the nation. On the other hand, the U.S. Virgin Islands (Puerto Rico’s next door neighbor) is exempt from the Jones Act, but its consumer prices are substantially greater across the board.

Congress in essence stepped out of the way and allowed Puerto Rico’s local government to tax all income produced within its shores. The island exempts vast tranches of its economy from taxation, collecting only about 10% of GDP each year. As reported in the July 11 edition of the Economist, “very poor countries” on average tax 13% of GDP. Meanwhile, rich developed countries tax 34%. Therefore, it should come as no surprise that the island is broke and lacks sufficient resources to build and maintain competitive public infrastructure and services, and pay its debts.

This entry was posted in Uncategorized. Bookmark the permalink.