The US commonwealth has become one of the world’s most attractive capital gains tax havens, and its residents don’t have much to show for it.
Tax incentives have contributed to a luxury boom in enclaves like Dorado Beach.
Photographer: Xavier Garcia/Bloomberg
Since 2012, Puerto Rico has offered investors — primarily mainland Americans — one of the most attractive deals in the world: move to the commonwealth and pay no taxes on interest, dividends or capital gains, all while living on a balmy and culturally vibrant Caribbean island without having to surrender US citizenship. But a decade on, a sweeping Internal Revenue Service investigation has turned up evidence of abuse; struggling Puerto Ricans are growing increasingly frustrated with the obvious favoritism; and you still have to squint to find evidence of trickle-down benefits for the broad economy.
All told, it’s time to consider changes to the program, including less generous terms and more accountability.
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