Essay On Puerto Rico Economy

“Puerto Rico’s Economy and it’s Affect on the People”

Although Puerto Rico had been one of the most progressive economies in the Caribbean region, today they face major economic turmoil. Concerns regarding the sustainability of Puerto Rico’s public finances have heightened over the past year, despite all of the measures that have been taken by the island’s government to reduce spending and increasing revenues. The debt in Puerto Rico has had a huge effect on the Puerto Rican population. The taxes have increased severely, unemployment rates are low, and many people are migrating to the mainland.

In 1898 Puerto Rico became a U.S territory , when it was acquired from Spain after the Spanish-American War. On July 4, President Harry S. Truman signed the Public Act 600, which allowed Puerto Ricans to create their own organized local government, a constitution that is comparable to those of of the United States. The constitution established the Commonwealth of Puerto Rico. “Puerto Rico 's economy depended heavily on the tax incentives given to U.S. mainland companies and on federal transfers; the code went into effect in 1976. In 1993,

The federal government granted tax incentives for eighty years, in order to spur the industrialization of the island. “Section 936 made foreign investment in Puerto Rico artificially attractive – creating, in effect, an economic bubble – it left the island vulnerable to a crash if the tax provisions were ever to be repealed. As it happened, section 936 became increasingly unpopular throughout the early 1990s, as many saw it as a way for large corporations to avoid taxes.” ( Greenberg Scott,Ekins Gavins) President Clinton signed a legislation in 1996 would phase out Section 936 in a ten year period. By 2006 Section 936 was phased out, this made Puerto Rico subject to the same worldwide corporate income tax as other foreign