Monday, November 01, 2010

Puerto Rico Comes on Board the Lower Taxes Bandwagon

There comes a time in the life of every government at least in freedom loving countries when the people must decide enough with the taxation already! That time has come for our country. Are we to live as slaves to a state that has no compunction about seizing a part of our wealth to fund idiotic and expensive politically motivated schemes whose end goals are always to control the "little people"? After all, according to their ideology, people do not know what is best for themselves or for the nation. Well, governors like Chris Christie and apparently Luis Fortuno in Puerto Rico are thinking over that perhaps politicians should not be taking control over the any economy.

Move over, New Jersey Gov. Chris Christie. You've got a tax-cutting, pro-growth competitor who may be even bolder than you. His name is Luis Fortuño and he is the governor of Puerto Rico, a place that, if you can believe it, is in worse fiscal shape than the Garden State.

When Mr. Fortuño took office in January 2009, Puerto Rico had a 46% budget shortfall equal to $3.3 billion. Things were so bad, he told me in a telephone interview from San Juan on Tuesday, that he had to fly to New York while still governor-elect to explain his fiscal plan to the investment community in order to avoid a sharp downgrade of Puerto Rican debt. "We were one step from junk status," he says.

After 22 months in office and a boatload of spending cuts, the deficit is now down to about 11%. That achievement notwithstanding, the commonwealth still is spending more than it takes in. In the Washington political handbook this means Puerto Ricans are not paying enough in taxes.

Mr. Fortuño has a much different view of the problem: He thinks high taxes have destroyed the Puerto Rican economy. He has already signed into law a five-year property tax holiday for real estate purchased through June of next year and waivers on fees for those transactions. Last week he handed his legislature a radical plan to simplify the tax code and sharply reduce corporate and individual rates.

Mr. Fortuño says that Puerto Rico's recession—which began two years before the U.S. recession—only partly explains the current crisis. "If you look at the past decade, Puerto Rico has had negative growth for the entire period." (According to his office, the economy contracted 0.2% in the 2000s.) This shows, he argues, that "we are in need of a major overhaul. If we just tweak it a little, we won't accomplish what we need."...
READ AT The Wall Street Journal

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