May 4, 2016 at 12:22 am #48622
There is no federal income tax for anyone in Puerto Rico, none.May 4, 2016 at 3:29 am #48625
Certain types of bonds are also not taxable – as INCOME. I don’t know about capital gains taxes in PR, but you and I and everybody else in CONUS (including AK and HI) can invest (or at least could) in Puerto Rican municipal bonds and get double tax free status out of them (meaning the income from them). You buy a bond, they pay an agreed upon interest (unless they default, like PR has done), and at the end of the 10, 20, 30, or whatever year point, they then give you your principal back. That’s how bonds work. And the interest payments on various types of municipal (government or government agency type) bonds are non-taxable at either/both the federal and state levels, depending on various rules. And if a bond is held to maturity just for the purposes of getting the tax free interest, there’s no capital gain at the end – just return of original principal, thus no taxes for any reason. In this respect, PR bonds aren’t all that different from a bond issued by your state or city (though there are some differences, I’m just not up on the details of the PR bonds that have now been defaulted on).May 4, 2016 at 3:03 pm #48632
Well 74, If there is no federal income tax then what are we doing there? If they want to be part of the U. S. and want help then they would have had to be paying taxes just like all of us.May 4, 2016 at 3:47 pm #48633
Read it and weep.
Taxation in Puerto Rico
Taxation in Puerto Rico takes the form of both Federal and Commonwealth taxes. Puerto Rico has independent tax-levying authority by provisions of 48 U.S.C. § 734 of the United States code.
Though the Commonwealth government has its own tax laws, Puerto Ricans are also required to pay most U.S. federal taxes, with the major exception being that most residents do not have to pay the federal personal income tax. In 2009, Puerto Rico paid $3.742 billion into the US Treasury. Residents of Puerto Rico pay into Social Security, and are thus eligible for Social Security benefits upon retirement. However, they are excluded from the Supplemental Security Income (SSI), and the island actually receives a small fraction of the Medicaid funding it would receive if it were a U.S. state. Also, Medicare providers receive less-than-full state-like reimbursements for services rendered to beneficiaries in Puerto Rico, even though the latter paid fully into the system.
The federal taxes paid by Puerto Rico residents include import/export taxes, Federal commodity taxes, social security taxes, among others. Residents also pay Federal payroll taxes, such as Social Security and Medicare taxes.[1May 4, 2016 at 5:08 pm #48635
74. If there was ever a very good argument to do away with the U.S. Tax code, this is it.
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