Thursday, March 21, 2013

Puerto Rico has been ransacked by Corporate Welfare

Puerto Rico's colonial status has given so much power to our various administrations, that they have ransacked our Treasury with high salaries and outrageous government contracts to cronies.

Puerto Rico not only serves as an offshore tax shelter for corporate money, but it has also served to enrich, beyond reasonable, a powerful, obscenely wealthy, local elite who exploit our people and control many members of Congress with their lobbyists and political donations.

Day by day, Puerto Rico looks more similar to a banana republic than to a territory of the United States. This colonial status and the offshore tax shelter status, has impoverished the US citizens in Puerto Rico, the American worker, and the American tax payer in the 50 states.

I personally blame the United States Governments for allowing this situation to persist. Many campaigns in Congress are supported by these coroporate moguls and PR's local elite who use their influence so that no one in Congress looks into Puerto Rico's business. 

I am disappointed to see how the US intervenes to bring democracy and restore a good quality of life for many foreign countries and yet they look the other way and keep Puerto Ricans living in the backyard as stepchildren . Our only choice to escape this sink hole is to move to a one of the 50 states. 
Miriam Ramirez MD 
(mjean1@gmail.com)
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Tax-News.com - Global Tax News
Moody's Doubts Puerto Rico Has Sufficient Tax Revenue
by Mike Godfrey, Tax-News.com, Washington

21 March 2013

With a need for additional tax revenues to cover the island’s increased fiscal deficit, Moody’s Investors Service, the credit rating agency, has disclosed its doubts over whether the new Puerto Rican administration can deliver on its promises.

Moody’s, and the other major rating agency Standard & Poor’s, currently have Puerto Rico only one notch above a non–investment grade rating. However, Moody’s has now effectively warned of the possibility of a further downgrade, as, since its most recent downgrade in December last year, Puerto Rico’s forecasted fiscal deficit in 2013 has doubled from USD1.1bn to USD2.2bn, due to lower tax revenues in a weak economy and higher public spending.

In fact, Moody’s doubts that the Puerto Rican Government’s present and future plans to resolve the additional deficit shortfall will be able to generate sufficient revenue in the short time available before the end of the fiscal year on June 30.

It points out that, by means of a move of corporate royalty payments from next year to this year and a compliance program against overdue taxpayers, as well as further spending controls, the Government expects to reduce the additional deficit by around USD600m. With regard to the other USD500m, however, it is only able to look at further spending cuts and even more aggressive tax collection measures, which may, or may not, prove successful.

As the operation of the US general spending cuts within the current sequester is likely to affect economic growth in Puerto Rico, and thereby impact tax revenues, Moody’s has also reflected that Puerto Rico’s access to tax–exempt borrowing in the capital markets will remain a crucial means of covering its deficit.

However, while its retention of an investment grade rating will be essential in retaining that access, the tax exemption for US municipal bonds is under some doubt as the US lawmakers discuss the elimination of some tax breaks within tax reform and a reduction to the US Administration’s own fiscal deficit.