Puerto Rico’s struggling economy has led to an exodus of young people moving to the US mainland – while wealthy Americans are starting to call San Juan home. As a result, the economy and identity of both places are changing in surprising ways.
While the US economy is steadily improving, Puerto Rico’s unemployment rate has remained at over 13%, twice the US national average, for the last decade. The island is facing a fiscal crisis with $72bn (£47.5bn) in debt.
So the government is looking elsewhere for relief. It has started to lure America’s super wealthy from the US East Coast. Two acts passed in 2012 guarantee no capital gains taxes and a mere 4% tax rate on their business to those who make Puerto Rico their primary residence.
More than 500 eligible individuals have answered the call.
“There has been some concern that we’re not contributing enough on the island and not everybody is happy about that,” says Robb Rill, who moved his business down in 2013.
He says the island is benefitting.
“There’s probably been almost a billion dollars invested on the island since these acts have passed, and that’s a billion dollars that would not have been invested on the island had there not been the proper incentives. So the everyman on the street doesn’t necessarily see the direct benefit, but I can tell you that there is an immeasurable benefit not just on the real estate but through direct investment which is making a difference.”
What do they get?
- No federal taxes on capitals gains
- 4% corporate tax rate on their business
This influx of mainland monied comes as tens of thousands of Puerto Ricans leave every year. They head in search of more opportunity on the US mainland, where they have the right to work as US citizens.
“What’s going on in Puerto Rico right now it’s the perfect storm,” says Valerie Rodriguez, a young lawyer in San Juan and member of the New Progressive Party.
“You have a population in Puerto Rico where the productive sector is shrinking and the young professionals are leaving. Then you have an elderly population that’s increasing in size, and obviously that population is going to depend more and more on government.”
Funding those government services is a contentious issue.
“I am the worker, I am the one who is paying the taxes,” says Orlando Rivera, a store manager in the city of Ponce. “I have to sustain my family, pay a 400-dollar electrical bill and my daughters’ tuition fees. And in the meantime [the millionaires] aren’t bringing any solutions to the problem.”