How Puerto Rico Became the Newest Tax Haven for the Super Rich

September 26, 2018 7:44 AM

“Having a little island of affluence in the midst of this crisis? The more hidden it is, the better. When people find out, they will say, ‘Motherfucker, why can't the government find some programs to help me?’ ” “Well,” I said, “they claim a few percent of something is better than 39 percent of nothing.” “If I am a beggar in the street,” Bernabe shot back, “and they give me ‘something,’ I will say thank you. But it would be better if I wasn't a beggar.” Jesse Barron writes in GQ about How Puerto Rico Became the Newest Tax Haven for the Super Rich.

Act 22 makes Puerto Rico the only place on U.S. soil where personal income from capital gains, interest, and dividends are untaxed. In order to qualify for Act 22, individuals must prove to the IRS that they have become bona fide residents of Puerto Rico, without “close contacts” on the mainland. Most native Puerto Ricans are not eligible for the exemption.

posted by RedOrGreen (16 comments total)

That was well worth the pain and hate (for the situation and many people, not the article itself) to get to the end and the iguana metaphor.
posted by cardioid at 8:58 AM on September 26, 2018 [5 favorites]

Rill is 47 but looks younger, with his hair pulled back in a bun and a goatee framing a pale, tapered face. “I was one of the first ten people to actually move under Act 22,” he said, taking his seat in a red-walled conference room. “There was literally nobody here.” His accountant, Jorge Kuilan, sat to his left, wearing a paisley shirt and a cryptic smile.

"literally" colonialism. disgusting.
posted by eustatic at 9:34 AM on September 26, 2018 [5 favorites]

“I believe it is my moral duty to minimize my taxes,” Tiggre said, and Act 22 was a legal way to pay the absolute least. Tiggre thought, indeed, that the privilege he enjoyed should be extended to everyone. Some things that taxes pay for, like the police and the military, he said could be supported through voluntary contributions. “If people are too stupid to voluntarily agree to band together and defend themselves,” he said, “then maybe they deserve to be conquered by Attila the Hun.”

Or, you know, Russia, I guess.
posted by eustatic at 9:37 AM on September 26, 2018 [3 favorites]

I can't suggest anything that won't put me on a list
posted by The Whelk at 9:43 AM on September 26, 2018 [13 favorites]

> I can't suggest anything that won't put me on a list

I was worried about the tags, myself.

(And yes, the iguana detail is just a delightful bit of writing craft.)
posted by RedOrGreen at 9:51 AM on September 26, 2018

Every effort to starve the IRS of the resources needed to investigate fraud is to support stuff like this. When you lack the money to do everything you should do, you triage. And when you need to show some success, you go after the shit you can prove with a few sheets of paper rather than with extended investigation. So who gets dinged? Not the top ranks with the detailed cons.
posted by phearlez at 10:29 AM on September 26, 2018 [4 favorites]

I have a feeling this Tiggre fellow's "voluntary contributions" to the police and military will not involve him volunteering for anything.
posted by The Card Cheat at 10:44 AM on September 26, 2018

Voluntary Contribution is a euphemism for Bribery.
posted by I-Write-Essays at 11:05 AM on September 26, 2018 [5 favorites]

I like the idea of using an iridescent green iguana as a symbol for the 1%.
posted by Cris E at 11:33 AM on September 26, 2018

In order to qualify for Act 22, individuals must prove to the IRS that they have become bona fide residents of Puerto Rico, without “close contacts” on the mainland. (Most native Puerto Ricans are not eligible for the exemption.)

Why not?
posted by jeather at 11:43 AM on September 26, 2018

> Why not?

They probably can't afford the "voluntary contribution" necessary to prove they don't have close contacts.
posted by I-Write-Essays at 11:46 AM on September 26, 2018 [1 favorite]

I can't believe I just read a story where people named Lobo Tiggre and Shimmy McHugh aren't even the worst people in it. Those have to be fake names, right?
posted by queensissy at 11:48 AM on September 26, 2018 [2 favorites]

Why not?


The law was designed to draw new people to PR, and it only applies to those that haven't lived in PR prior to the passage of the act.
posted by jpe at 12:32 PM on September 26, 2018

I like the idea of using an iridescent green iguana as a symbol for the 1%.

Because of the destructive effect on the environment, I agree that iguanas should be removed from that particular ecosystem.
But iguanas didn't voluntary relocate to Puerto Rico, they were deliberately brought in, and then deliberately released. Probably many of them by assholes tired of caring for them.

I have my doubts that iguanas would voluntary want to be associated with the invasive 1%. Even iridescent green lizards have their standards.
posted by BlueHorse at 12:36 PM on September 26, 2018 [1 favorite]

Lobo Tiggre and Shimmy McHugh

They sound like characters from an Annie Proulx novel.
posted by urbanwhaleshark at 2:01 PM on September 26, 2018

The article doesn't do a very good job explaining how any of this actually works. I was kind of confused about how Puerto Rico can get away with having a law by which they don't charge federal taxes -- I mean, it's the federal government who decides that -- but apparently PR is not subject to federal income tax and Puerto Ricans don't have to pay federal income taxes on income derived from PR sources. TIL!
posted by phoenixy at 9:36 PM on September 26, 2018 [1 favorite]