Puerto Ricans are still struggling to recover after the island was pummeled by Hurricane Fiona last week, leaving roughly 1.5 million people without power across the island. The harsh reality of modern-day colonialism makes rebuilding after yet another natural disaster even more challenging here, and has led to things like the problematic privatization of the electric grid by U.S. and Canadian companies.
The storm has also, once again, highlighted the stark inequality between Puerto Rican natives who reside there, stranded without resources, and the wealthy class of mainland Americans who take advantage of the island’s tax policy. Act 60 was introduced as a group of huge “tax incentives” for non-Puerto Ricans who move to the island, and includes zero income tax on individuals’ passive income and capital gains.
“A lot of my friends who are down here as well for tax purposes, they’ve bounced — they’re back in their second homes, they’re gone,” an American proclaimed on a now-viral TikTok video.
Self-identified Puerto Rican nationalist Dean Huertas reshared the clip in his own viral video via Twitter, in which he problematized this trend.
“In times like these, right now, during a hurricane, they [Americans] leave — and then they wonder why a lot of people give them s--- for it,” Huertas said in his video. “Because they are living here for their own benefit, and when times are not beneficial to them, they fly like a flock of pigeons.” Here, Huertas identifies the extractive relationship the ultrawealthy have with the island, which affords it massive tax breaks and a different set of rules than those of non-Puerto Ricans. The presence of these tax evaders has, among other things, driven up prices, displaced some local residents and increased social, political and economic inequality.
This is not a new issue. “Stop Letting the Rich Move to Puerto Rico as a Tax Haven,” a 2015 New York Times headline read, in an op-ed written by tax lawyer Edward Kleinbard, who also served as the chief of staff of Congress’ Joint Committee on Taxation. “With no U.S. or Puerto Rican tax on much investment income of new residents, U.S. citizens now can pay zero tax on capital gains,” he said, decrying the influx of tech billionaires who exploit the island.
Depriving the territory of this potentially taxable income inhibits investments in public goods. There is less money to invest in things like infrastructure, meaning inadequately built roads and bridges are easily decimated by storms, cutting locals off from rescue efforts. Puerto Rico’s financial crisis is precisely what made it so vulnerable to the partial privatization of its electric grid, which started failing long before Fiona hit the island and has intensified the storm’s damage (around half of the island, or 1.47 million people, still had no power as of Saturday). Crucially, inequality makes recovery efforts harder. Natural disasters make inequality worse, too, according to numerous studies.
Puerto Ricans who object to the tax laws say that it only widens colonial-style inequities and worry it might also distort local politics, as tax evaders on the island are eligible to vote and may well vote in their own interests, such as trying to prevent Puerto Rico from gaining statehood (and therefore ending the tax-haven gravy train).
“It is in these past years of tax havens and inaccessible incentives for natives that have strengthened and upheld colonialism,” Alexandra-Marie Figueroa told Time in 2021. She works with Taller Salud, a feminist organization in Puerto Rico, which has been openly critical of these tax laws. They were “crafted behind closed doors to make Puerto Rico a paradise for those that barge in and can afford it, but a life-sentence for those of us who try to hold on to what we have left of our country,” said Figueroa.
High levels of inequality are precisely what has contributed to the devastation in Puerto Rico in the first place. In order for it to recover, in as much as it can, and to minimize the impact of future natural disasters, tackling inequality must be a policy priority. It starts by changing the tax laws.