Since Hurricane Maria hit Puerto Rico last September, hundreds of thousands of people have relocated to the United States mainland citing rising unemployment and untenable living conditions as the main reasons. Yet, there is one group who not only rode out the storm, but have no plans on leaving: rich, mainly White Americans who live in Puerto Rico to avoid paying taxes.
In 2012, the Puerto Rican government passed two laws to turn the island into a tax haven and, reports GQ magazine, a “global investment destination.” Says GQ, “Act 20 allows corporations that export services from the island to pay only 4 percent tax. Act 22 goes much further: It makes Puerto Rico the only place on U.S. soil where personal income, capital gains, interest, and dividends are untaxed.” One thousand five hundred mainlanders have established residency in Puerto Rico since the laws were passed.
There are two caveats to qualify for this status. One, you must live on the island for 183 calendar days a year (although, as GQ points out, a calendar day can be achieved by a single minute spent on the island—less than the amount of time needed for a plane to land and for someone to transfer to a flight somewhere else). Two, you must prove to the IRS that you do not have close contacts on the mainland, like a spouse.
Before the hurricane, Puerto Rico was attempting to repay creditors a total of $3.6 billion through 2022. Maria’s recovery costs are an estimated $94.4 billion. Though the tax haven laws were meant to pour money into the islands, GQ reports that they have created just 12,000 new jobs for a workforce of 1.1 million people.