Do Puerto Ricans Pay Taxes?, And Other Misconceptions About America’s Largest Territory

Much is made of the fact that Puerto Rico residents do not “pay taxes” and thus seem to derive a great deal of benefit from being a U.S. territory. However, this factoid is both incorrect and irrelevant.

For starters, to be precise, most Puerto Ricans do not pay federal income tax — they still pay other federal taxes in addition to their own state and local taxes. This is partly why they receive far less federal funding than U.S. states, which in turn explains why the territory is poorer than the poorest U.S. state, Mississippi, with nearly half its population below the federal poverty line. (Hence one reason why more Puerto Ricans live in the continental U.S. than on the island.) On the other hand, it is fairly wealthy and economically competitive by Latin American standards.

In any event, as an “unincorporated” territory, Puerto Rico does not enjoy the full rights and guarantees of the U.S. Constitution (including the Bill of Rights), despite the fact that its residents are otherwise full U.S. citizens (and, one should add, are disproportionately represented in the armed forces, which is allegedly one reason citizenship happened to be extended to them in 1917, during the First World War).

Subsequently, the island’s 3.5 million inhabitants are represented by only one non-voting Congressperson; by comparison, the state of Connecticut, with a similar population, has five Congresspeople (with full participation of course) plus two Senators. Puerto Ricans are also barred from voting in U.S. presidential elections, which is curious when you consider that most American citizens can vote anywhere in the world regardless of how long they have lived there — except if it is Puerto Rico (among other unincorporated U.S. territories like Guam and the Virgin Islands).

Puerto Rico’s ambiguous and often confusing political status — which includes the fact that in some world sporting events and international organizations it is treated as an independent entity — is in large part why it is so troubled. The inherent geographic and economic disadvantage of being a small island is made worse by regulations like the Jones Act, which restricts shipping to costlier U.S. owned, operated, and produced vessels. The island’s Commonwealth status prohibits it from seeking debt relief the way other U.S. polities can. Finally, many Americans — nearly half — do not even know Puerto Ricans are citizens, let alone the island’s status; this accounts for why it is usually neglected by the public

For their part, Puerto Ricans have held several referenda on the status question since 1967, with the bare majority opting for the status quo. Although the most recent plebiscite, which took place last June, saw the vast majority support statehood, the turnout was historically low, at less than a quarter of eligible voters. The issue of turnout, as well as the complicated way the questions are often phrased, has made it unclear where most Puerto Ricans lie on the issue.

Of course, any vote result would be moot unless Congress chose to follow through, since only the U.S. legislature can admit a new state. Independence is neither popular among Puerto Ricans nor (ostensibly) something the U.S. would want. (It is unclear whether Puerto Rico can unilaterally declare independence or whether this, too, would require Congressional approval.)

Anyway, this is just a beginner’s primer on a very complex and nuanced issue, and I am by no means an expert, so feel free to add something or fact check.

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