Thursday, June 25, 2015

"Examining procedures regarding Puerto Rico’s political status and economic outlook"

US House Subcommittee Hearings on Puerto Rico's Political Status
June 24, 2015

Held in Washington DC, June 24, 2015

(Miriam J Ramirez's Testimony starts at 1:34 min)

MJR Complete Testimony Included For The Record 

Witness List: Witnesses and Testimony:
Panel I
The Honorable Pedro R. Pierluisi
Resident Commissioner of Puerto Rico
President of New Progressive Party (PNP)
Washington, D.C.

The Honorable César A. Miranda Rodríguez
Attorney General of Puerto Rico
Popular Democratic Party (PPD)
San Juan, PR

The Honorable Rubén Berríos
Former Senator in the Puerto Rican Senate
President of the Puerto Rico Independence Party (PIP)
San Juan, PR

Panel II
The Honorable Luis G. Fortuño
Former Governor of Puerto Rico, 2009-2011 (PNP)
Washington, D.C.

The Honorable Carlos Romero Barceló
Former Governor of Puerto Rico, 1977-1985 (PNP)
San Juan, PR

The Honorable Aníbal Acevedo Vilá
Former Governor of Puerto Rico, 2005-2009 (PPD)
San Juan, PR

The Honorable Carmen Yulín Cruz Soto
Mayor of San Juan, 2013-Present (PPD)
San Juan, PR

Ms. Miriam J. Ramirez MD
Former Puerto Rico State Senator, 2001-2005 (PNP)
Founder, Puerto Ricans in Civic Action
Orlando, FL

Wednesday, June 24, 2015

ORAL Statement for the June 24, 2015 Hearings On Puerto Rico Subcommittee On Indian, Insular, And Alaskan Native Affairs

Miriam J. Ramirez MD
Former Puerto Rico State Senator

C: 787-567-1333

ORAL Statement for the June 24, 2015 Hearings On Puerto Rico
Subcommittee On Indian, Insular, And Alaskan Native Affairs

Honorable Chairman Young and members of the Committee: My name is Miriam Ramirez, I am a medical doctor, former Senator of the New Progressive Party in Puerto Rico, and founder of a non-partisan grassroots movement, called Puerto Ricans in Civic Action, which gathered more than 350,000 individually signed petitions for statehood and delivered them to Congress in the 1980s.

Mr. Chairman, it is has been a privilege to know you and count on your solid and courageous support to advance our struggle to achieve equal rights for the almost 4 million disenfranchised US citizens in Puerto Rico.  Decades ago you responded with your full support when more than 350,000 Puerto Ricans petitioned Congress for Statehood. Today you are again giving us an opportunity to obtain our equal rights and obligations as U.S. citizens of this great Nation.

In my testimony on May 22, 1986, when Congressman Morris Udall was the Chairman, I identified our lack of full rights as US citizens as the fundamental reason for the poor economic performance of Puerto Rico, compared to other states. Today I want to focus my testimony on the negative consequences of the federal tax regime that has kept Puerto Rico labeled as a “foreign” jurisdiction for almost a century.

In1996 after Section 936 was eliminated, the former Section 936 firms used Puerto Rico´s “foreign” tax status and converted to Controlled Foreign Corporations (CFCs).  However, the CFCs in Puerto Rico are not obligated to create local jobs or to generate any real investments in order to benefit from the federal tax deferral. Using transfer pricing abuses, the CFCs in the Island are causing the US Treasury to lose billions in federal tax revenue without creating jobs and investment in the Island. The Senate Permanent Subcommittee on Investigations identified one company in Puerto Rico that benefitted from a tax savings of $22 million per employee, but yet only generated 177 jobs. 

Also, to exploit this special federal tax status,  the supposed pro-statehood administration of former Governor Fortuño adopted two laws in 2012. Act 20 and Act 22 entice millionaires who reside in the 50 states to locate to Puerto Rico by taxing their corporate profits from exported services at a flat 4% rate and allowing those profits to be paid out to these owners free of Puerto Rico income tax.

Thus, the CFC regime in Puerto Rico has become a significant drain of tax revenue and a formidable opponent of statehood for Puerto Rico. Keeping Puerto Rico as a ¨foreign” country inside the United States undermines the U.S. federal tax base and creates unfair competition against local communities in the 50 states.  But the truth is that Puerto Rio is governed by the CFC REGIME and the economic power of super billionaires who since Law 22 of  2012 can relocate to Puerto Rico without paying state or federal taxes.
But that is not the only damage they do..... they have the most powerful Public Relations army in the World, ready to lobby and fight  against anything that endangers this outrageous tax evasion scam to the US and the US Taxpayer. Their worst concern is that Puerto Rico may become a state of the Union. They are ruthless in their attacks when they feel threatened with that possibility and will destroy or attempt to destroy anything or anyone that even remotely attempts to help the US citizens of Puerto Rico gain full citizen rights.

The CFCs are effectively in control of our major political parties and their governing agenda. Whenever the people put pressure for a process of self determination, millions of dollars appear out of nowhere to campaign against statehood, since it will be the death knoll for the CFC scam. 

It is for this reason I that it is impossible to fight against the CFCs if we want to achieve statehood in Puerto Rico. We have to make the CFCs part of the political status solution.

Mr. Chairman, I propose that a statehood bill, with the defined terms of admission and a 20 year transition period for maintaining the CFC's in Puerto Rico, come out of your Committee. There is a precedent for previous statehood bills to include temporary tax benefits,  and a transition period was included in the Senate Bill 712 in 1990.   (I have submitted for the record a draft of said bill.)

I am submitting a draft admission act prepared by my constitutional  counsel, Attorney Roberto Santana, which also includes what I call the Costas amendment, in honor of Attorney Luis Costas who first educated me on these issues. To get the CFC's on our side, (or rather off our backs ) award the Corporations special tax incentives for a period of 20 years in the transition process. 
This is the way we designed it in the original Young bill.
Thank you very much..

Saturday, June 20, 2015

Puerto Ricans Pay a Big Price So Individuals And Corporations Can Evade Paying Taxes

With the blessing of the Federal and Local governments, Puerto Rico, although a territory of the United States, (the people are US Citizens by birth) is coded as a foreign country so that greedy US Domestic corporations and wealthy individuals may evade US Taxes. 

We, the US Citizens in Puerto Rico, pay outrageous high Local and many Federal Taxes, while Corporations and Wealthy individuals who relocate from other states do not. 

The cost of Puerto Rico's use for IRS tax evasion, is much more than money. As a result, Puerto Ricans do not have the right to vote for the President or have Representation in the US Congress.

by Robert W. Wood
July 04, 2014

Robert W. WoodIncreasingly, Americans are ditching their passports for far off lands. In some cases, they are motivated by high taxes and America’s unique worldwide tax reporting, though that’s rarely the only issue. Yet lower taxes can be had a lot closer to home and with more security. And you don’t have to ditch your U.S. passport.

It almost sounds too good to be true. After all, aren’t U.S. citizens taxable on their worldwide income? Yes, but read on. Puerto Rico is a U.S. Commonwealth. It is part of the U.S. but in some ways still independent. It’s tax system is a hybrid, part of the U.S. and well, not.

If you can really move yourself and/or your business, you may be able to cut your income taxes down to almost nothing. You have to be careful, though. The interaction between the IRS and taxman in Puerto Rico is nuanced, requiring some Puerto Ricans to file with the IRS, some with the Puerto Rico Department of Finance, and some with both. But there are great incentives by which Puerto Rico hopes to lure American mainlanders there. 

The incentives include an income tax in Puerto Rico of only 4%. Compare that to your combined federal and state income tax burden you may pay now! Legally avoid the 39.6% federal rate and the 13.3% California (or other state) rate? That sounds pretty good.

What’s more, there is no tax on dividends. If you are receiving distributions of company profits or have investments yielding dividends, they are tax-free. There’s also no capital gain tax in Puerto Rico. If you sell your company, sell real estate, sell shares in public companies, you name it, no capital gain tax.

But several cautions are in order. There are rules to limit big appreciation from the past and moving there right before you sell. In that example, you pay a 5% tax). But even more fundamentally, you have to actually move. Your tax home—your realhome—must be in Puerto Rico. Remember, just like any move from one state to another, it has to look and be real.

Try to avoid messy facts that don’t look like a permanent move. If possible, sell your home, move your family, sever connections to your old local clubs, etc. After all, if you are later ruled not to be a Puerto Rico resident, the IRS is back in the picture asking for back taxes, penalties and interest.

To qualify, an individual must not have been a resident of Puerto Rico within in the last 15 years. You must become a resident of Puerto Rico by December 31, 2035, and you must reside there for at least 183 days a year. You also have to do the paperwork, filing an application with the tax authority there. Once that’s approved, it’s a binding contract and you’ll get:
  • Tax-free interest and dividends earned after you become a resident.
  • No long-term capital gains tax on appreciation after you become a resident.
  • 5% tax on long-term capital gain for appreciation before you move for any sales during your first 10 years as a resident.
Puerto Rico also has great incentives for business owners. If you have a business that can be moved, that can be a real tax home run both --for you and the company.

You can reach me at This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.without the services of a qualified professional.

Friday, June 19, 2015


Report Reveals Walmart’s Secretive Use of Tax Havens Allowing Company to Dodge Taxes
Wednesday, June 17, 2015

A groundbreaking report released today byAmericans for Tax Fairness (ATF) unveils that Walmart has built a vast, undisclosed web of 78 subsidiaries and branches in 15 offshore tax havens, which may be used to minimize foreign taxes where it has retail operations and to avoid U.S. taxes on those foreign earnings. These secretive subsidiaries have never been subject to public scrutiny before and have remained largely invisible, in part because Walmart fails to list them in its annual 10-K filings with the U.S. Securities and Exchange Commission (SEC). Walmart’s preferred tax haven is Luxembourg, dubbed a “magical fairyland” for corporations looking to shelter profits from taxation.

The report, The Walmart Web: How the World’s Biggest Corporation Secretly Uses Tax Havens to Dodge Taxesis available here and the report’s Key Findings are here.

“Companies use tax havens to dodge taxes. It appears that’s the secret game Walmart is playing,” said Frank Clemente, executive director of Americans for Tax Fairness. “We are calling on Congress, federal agencies and international organizations to determine if Walmart is skirting the law when it comes to reporting its use of tax havens, using various schemes to dodge taxes, and getting a sweetheart deal from Luxembourg that is the equivalent of illegal state aid. Average Americans and small businesses have to make up the difference when Walmart doesn’t pay its fair share of taxes.”

“Walmart  is another example of a multinational corporation engaging in deceptive tax practices, in this case hiding from investors and the public for years the existence of an extensive network of 78 tax haven subsidiaries by dubbing them ‘not significant’ and omitting them from its public filings,” said former U.S. Senator Carl Levin (D-MI). “Walmart’s undisclosed subsidiaries in 15 different tax havens hurts its credibility on tax matters and raises questions about whether it is using hidden offshore tax dodges.  Walmart is a perfect example of why multinationals should be required to provide publicly-available country-by-country reports on their revenues and tax payments — disclosures that would help stop profitable multinationals from engaging in offshore tax schemes to avoid paying tax.”

“To see Walmart building up this huge web of tax havens and keeping them hidden from the public is a slap in the face to small business owners who work hard and pay our fair share here at home,” said David Borris, owner of Hel’s Kitchen in Northbrook, Illinois, and Executive Committee member of The Main Street Alliance. 

“Small business owners are proud of our local communities, and we’re proud of our country. We pay our fair share of taxes to make sure our communities stay strong. By keeping its profits in tax havens, Walmart doesn’t benefit anyone but its owners and shareholders.”

In recent years, Walmart has made tax havens central to its growing International division, which now accounts for one-third of the company’s profits. Walmart’s network of 78 undisclosed overseas subsidiaries in tax havens have no retail operations and few, if any, employees. The subsidiaries are mostly invisible, as Walmart hasn’t listed them on Exhibit 21 (“Subsidiaries”) of the company’s annual 10-K filing with the SEC. There is a legal requirement to list subsidiaries that account for greater than 10 percent of assets or income, which Walmart may be skirting. Most, if not all, of Walmart’s 27 foreign operating companies in places such as the United Kingdom, Brazil, Japan, China, Chile and South Africa, are owned through subsidiaries in tax havens.

Walmart currently has 22 shell companies with addresses in Luxembourg – a country infamous for helping companies dodge taxes. Walmart has established 20 of these shell companies since 2009 and five in 2015 alone, yet Walmart does not have a single retail store there. Walmart has transferred ownership of more than $45 billion in assets to Luxembourg subsidiaries since 2011, and reported paying less than one percent in tax to Luxembourg on $1.3 billion in profits from 2010 through 2013.

When corporations like Walmart use tax havens other American businesses that play by the rules can get stuck picking up the tab. Recently U.S. PIRG released a report, Picking Up the Tab 2015which showed that every American small business would have to pay an average of $3,200 in additional taxes to make up for all the lost revenue due to corporations exploiting tax havens. 

state-by-state breakdown from the U.S. PIRG report shows how much small businesses would owe on average and cumulatively in each state.

The Walmart Web report is being released as Congress and the Obama Administration consider whether any form of corporate tax reform can be crafted and voted on this year. A central part of that discussion is how to tax the $2.1 trillion in offshore profits that are held by U.S. corporations and are currently untaxed here at home. The conventional wisdom in Washington is that corporations should be able to bring these profits home at a steeply discounted tax rate, and the revenue would be used to rebuild roads and bridges. This would result in a huge tax break for multinational corporations that have already dodged paying their fair share of taxes, many through the use of offshore tax havens. Instead, Congress should require that Walmart and other multinationals pay all legally required taxes on their growing pile of overseas earnings, which would raise substantially more revenue to make new investments.

Further information, related materials and shareable graphics on the The Walmart Web report can be found here.

Americans for Tax Fairness is a diverse coalition of 425 national and state endorsing organizations that collectively represent tens of millions of members. The organization was formed on the belief that the country needs comprehensive, progressive tax reform that results in greater revenue to meet our growing needs. ATF is playing a central role in Washington and in the states on federal tax-reform issues.

Peter Knudsen, Communications Director, Americans for Tax Fairness