Romero Barceló makes the case for voting for Statehood;
CRB
Hernández Colón explains ELA Soberano is a vote for Independence
Romero Barceló makes the case for Statehood
Carlos Romero Barceló, who served two terms each as mayor of San Juan, governor and resident commissioner, has been fighting for statehood during his entire public life.
For him, the status question is straightforward: Puerto Rico’s current political status is a colony subject to the authority of the U.S. Congress, and the only way to resolve the current dilemma is by becoming a state or an independent nation.
«The better choice for Puerto Rico is clearly statehood,» said the New Progressive Party veteran. «However, what concerns me very much is that some of the new leadership of the Popular Democratic Party have been trying to convince voters that voting for ELA Soberano [sovereign free association] is a vote for an ELA [Commonwealth] with more powers. Nothing could be further from the truth.»
«I couldn’t, and still can’t, accept our disenfranchisement, the lack of voting representation in Congress,» Romero Barceló recently wrote in CARIBBEAN BUSINESS. «I have worked so hard and will continue to work for equality because I firmly believe democracy is the best and fairest form of government the world has ever seen and experienced.»
Romero Barceló argues that statehood wouldn’t only bring full democracy to Puerto Rico, providing residents with full representation in Congress and the ability to vote for the U.S. president, but would also increase federal funds, the number of federal jobs on the island and improve economic conditions. «As a state, Puerto Rico would have five representatives in Congress, all members of several committees each, with voting power, and very importantly, we would have two U.S. senators in the most powerful body of Congress, where there are only 100 members. Puerto Rico would have the same two members in the Senate as all the big states, such as California, New York, Florida, etc. The Senate is the only body of Congress where one member can almost stop any proposed law,» he said.
In arguing his position, Romero Barceló tears down what he sees as the myth of Commonwealth being a bilateral pact. He said that both former Gov. Luis Muñoz Marín and former President Harry S. Truman «lied» about Puerto Rico being granted autonomy and that any benefit Puerto Rico has under the current status was granted by Congress and can be taken away by Congress.
Romero Barceló also rejected arguments that the road to statehood will necessarily be long, arguing that it can be achieved in as little time as a year after Puerto Ricans vote to become part of the U.S. A member of the national Democratic Party, Romero Barceló also believes the growing political clout of Latino voters across the U.S. will help overcome the historic opposition to statehood by conservative politicians.
He has pushed for local and U.S. action on the island’s status during his two terms each as governor and as resident commissioner.
In pushing for a «no» vote in next month’s plebiscite, Romero Barceló said it would be «shameful» for Puerto Ricans to vote «yes.»
«People from other countries would see us as the only people in the world who want to remain as a colony,» he said.
Hernández Colón sees a ‘yes’vote as the only option
When former Gov. Rafael Hernández Colón talks about status options for Puerto Rico, a lifetime of experience dealing with the U.S. Congress contributes enormously to his informed perspective. His influence was on display in a historic meeting of the Popular Democratic Party (PDP) Governing Board, which took place in the aftermath of the pro- Commonwealth party’s defeat in the 2008 general election. There, he was asked whether the time had finally come to make it perfectly clear that ELA (Commonwealth) and ELA Soberano (sovereign free association) were two very different things. With his answer, «yes,» Hernández Colón set in motion the PDP’s institutional position that ELA Soberano was the same as independence.
He explained to CARIBBEAN BUSINESS that, as a status option, sovereign free association would send Puerto Rico down a path toward independence without guarantees of keeping U.S. ties.
In his three terms, Hernández Colón saw firsthand a resistance to Puerto Rico statehood on Capitol Hill. What he used to call his «sense of the Senate» was developed over the course of more than four decades attempting to obtain a federal mandate on Puerto Rico’s status.
He witnessed a 1967 referendum result favoring Enhanced Commonwealth come to nothing thanks to political infighting by Puerto Rico’s parties. He then observed with great frustration how a self-executing bill to resolve Puerto Rico’s status issue was again derailed in the U.S. Senate’s Energy & Natural Resources Committee in 1992. On that occasion, enemies of the island’s statehood movement added a poison pill amendment at the 11th hour, bringing the vote to a stalemate.
Hernández Colón’s political nemesis, former Gov. Carlos Romero Barceló—against whom he waged legendary election campaigns for the governorship— fought similar discriminatory assaults when Rep. Gerald Solomon (R-NY) attempted to make English the only language spoken in Puerto Rico. Although Romero Barceló was successful in killing that ill-intended amendment, such prejudice supports Hernández Colón’s belief that there will always be Congressional resistance to seriously dealing with Puerto Rico’s status issue.
Now, in 2012, he remains convinced that Puerto Rico must fight to keep the Commonwealth status because he sees independence as too great a risk and statehood as a process that could take Puerto Rico down a 10-year road to incorporation that would cut into the island’s budget as it transitions toward parity in federal funding.
Hernández Colón believes Puerto Ricans should fight to keep the status they have—with U.S. citizenship, a common currency and what he calls «the compact defining the relationship between Puerto Rico and the U.S.,» established in 1952. Only weeks removed from a visit to Florida where he campaigned with Romero Barceló for the re-election of President Barack Obama, Hernández Colón shared his views regarding this coming referendum on Puerto Rico’s status.
Romero Barceló’s advice on status
CB: We have a first question [in the Nov. 6 status referendum]: a «yes or no,» on whether the people want to remain in the current status. Talk about that first question and what it implies.
Romero Barceló: The first question is whether «I prefer the present political territorial relation with the U.S.»; our response would be «no,» because we want to reject the territorial status, which is a colony in international terms because we don’t have the right to vote [for the president of the U.S.], we don’t have the right to representation. I’ve spoken to lawyers who maintain we have full autonomy, and we don’t have full autonomy, that’s a lie, and [former Gov. Luis] Muñoz Marín and [former] President [Harry S.] Truman lied and had their representatives lie to the United Nations, saying we had full autonomy; full autonomy means we wouldn’t have Congress passing laws that we’re subject to. We aren’t fully autonomous. Again, I’ve spoken to lawyers who say we have full autonomy. Well, I say, ‘what about the labor laws, the minimum wage law, what about the banking laws, what about the commerce laws, transportation, health, environmental, they all…criminal law and many other federal laws apply without our specific consent.
The PDP [Popular Democratic Party] says we have reached fiscal autonomy, but that is not true. Whatever powers we have are because we are allowed to have them by the federal government. We might not be subject to federal income tax for income earned in Puerto Rico, but we do pay federal income tax on any earnings from outside of Puerto Rico. Many people don’t even pay federal tax on earnings from investments from stocks and bonds because of a lack of knowledge, because they have been misled on the subject.
If we vote «yes» to the first question, it means we want to remain in the same status, which would be a shame. People from other countries would see us as the only people in the world who want to remain as a colony. To vote «yes» is a shameful act. I would be embarrassed by that result as a Puerto Rican.
CB: President [Barack] Obama commented that we would need an overwhelming majority for him to act on a favorable result in favor of statehood…
Romero Barceló: He [President Obama] said, «a clear majority…» Fifty [percent] plus one is a clear majority in any democratic jurisdiction. I think that in this day and age, the U.S. can’t ignore that. They’ve been the inspiration for other countries like Poland, Czechoslovakia, Hungary, Romania, East Germany and even Russia, to [move] away from communist dictatorships and pursue liberty, so the U.S. can’t say no if the majority of Puerto Ricans vote against the colony.
If you vote «yes’ on the first question, any vote in the second question would be a contradiction; all three other options aren’t territorial.
CB: If people vote «yes» for statehood, what would be the next step? What would be the process?
Romero Barceló: The governor should go to Congress with a certification from the [State Elections Commission] and notify the leaders of the Senate, the House and the president of the results of the ballot in Puerto Rico and demand they make this a reality, because the people of Puerto Rico demand the right to representation and want to vote for the president. This would require a vote in the House of Representatives, a vote in the Senate that needs a simple majority and then it goes to the president.
CB: Do you expect this would happen quickly?
Romero Barceló: I think this could happen as soon as in a year. I say that because when the Berlin Wall went down, both Germanys were united within a year. It was more difficult there because there were many differences to deal with—different governments, political and economic systems, yet they did it in a year. In our case, there are hardly any differences. We can even keep the name of Commonwealth, just as other states.
CB: Detractors of statehood imply this could take forever. They bring up the case of Texas, which took nine years to become a state. Do you think that is not our case?
Romero Barceló: It has taken us much longer. It has been since 1917. No other territory has waited so long. We comply with all the requirements of the Northwest Ordinance [the act creating the Northwest Territory, the first organized territory of the U.S.]. We are larger than Rhode Island and Delaware put together, both in territory and population.
There is no such thing as an unincorporated territory in the U.S. Constitution.
CB: Would the big Hispanic population be a factor that will exert pressure on Congress?
Romero Barceló: Yes, and we need to start working closer with Hispanic organizations such as Lulac [League of United Latin American Citizens] and [the National Council of] La Raza. These are very powerful and active organizations that I know would support our efforts. If Puerto Rico becomes a state, it would have two members in the Senate and five or six in Congress. Puerto Rico would have a lot of influence in supporting issues related to the growing Hispanic population, and that would be in everybody’s best interest.
I think we have allowed Luis Gutiérrez to become the sole spokesperson of Hispanic issues, and he has become the hero of illegal immigrants’ issues. Luis Gutiérrez doesn’t believe in anything, just in himself, and he has taken advantage of that for his own purpose.
CB: ELA Soberano [sovereign free association]: what does it mean? Alejandro García Padilla told this newspaper it is the same as independence. Please comment on what you understand it is.
Romero Barceló: This formula is an agreement between two sovereign countries. What this would mean is that Puerto Rico would have to become an independent state before entering any kind of negotiations with the U.S.
The term Estado Libre Asociado Soberano is very misleading. Supporters of the PDP will focus only on the term ELA and will think this is a similar status as the present ELA, without realizing that under this formula, Puerto Rico will become an independent nation that will negotiate a special treaty with another country [the U.S.].
[The New Progressive Party] has allowed itself to be used to mislead our people with this situation.
CB: If ELA Soberano becomes the winning formula, how realistic would it be that the U.S. would allow us to implement it?
Romero Barceló: That would be impossible because we are [U.S.] American citizens and that citizenship would not be possible under that formula. If you join the local army, police force or any other national entity where you would have to pledge allegiance to that country (ELA Soberano in this case), you would automatically lose your U.S. citizenship.
Also, the route to free association would be through independence, and the U.S. could choose not to grant any agreement.
An example of what could happen is Palau; its people are called U.S. nationals, not U.S. citizens, and they don’t have free mobility between the mainland U.S. and the island as Puerto Ricans do.
CB: The third formula in the status plebiscite is independence, which is self-explanatory, but please tell our readers your definition of it.
Romero Barceló: If there is a majority, Congress would grant it [independence], just as it would grant statehood, but it would not be overnight. There are 3.5 million [U.S.] American citizens on the island, and Congress will have to ponder what it will do with those citizens against independence and [who] don’t want to lose their [U.S.] American citizenship. Also, bear in mind that many Puerto Ricans, probably millions, would be relocating to the mainland U.S. in a year’s span. Most probably, the ones leaving the island would be educated, middle- and high-class people who are the ones capable of helping the country. It would be a human capital and economic drain of unimaginable proportions. No [demand] for services, no demand for housing, no demand for businesses, it would be total chaos, and Congress would have to deal with it.
CB: What would happen with federal funds under each of the options?
Romero Barceló: One of the cries in the U.S. revolution was no taxation without representation; in Puerto Rico, it is no representation without taxation.
Under statehood, we would receive additional funds. At present, we are not treated equally to the states of the union. Medicaid is a good example. If we were a state, we would receive from the federal government 80% of our expenditures and we would have to put [in] 20%. At present, we receive only 40%, and that is after it being recently increased from 25%. That would mean we would get close to $2 billion more in federal funds for this program, which would go into our healthcare system immediately. That is a lot of money. That would be tremendous in job-creation terms.
CB: What about the food-stamp program under statehood?
Romero Barceló: Originally, we got the same treatment as the other states under the program, but we were the fourth-largest recipient after California, New York and Texas, with much less population, and the subject was revisited by the federal government. We were getting much more funds per capita than most other states, and a cap was placed on the funds the island receives.
At the time, I negotiated with them to give Puerto Ricans checks instead of food stamps, under the premise that food stamps had become sort of a parallel currency that was [used to] negotiate for dollars. Food stamps create a black market exchange because, although they are supposed to be utilized to buy food, people have other needs such as buying clothing, shoes, books, paying bills, even to buy liquor, so they go to a store and exchange $100 for $80 to lure the merchant to allow [the purchase of] other things besides food. With checks that doesn’t happen. People use the funds to buy what they want.
In the States, they don’t allow it because the food-stamp program is really a program designed to help farmers; it is not necessarily a welfare program.
The local food industry convinced [then-Gov. Pedro] Rosselló to put some limitations to how much food-stamp recipients could spend on nonfood items, and a 25% limit was implemented.
Another important thing hardly ever discussed is that if Puerto Rico becomes a state, the [number] of federal jobs on the island will substantially increase. Statistics show that on a per capita basis, we have approximately 50% to 60% [of] the federal jobs [that] the states have. That would immediately become an infusion of additional good-paying jobs the island now lacks. They would come from agencies that are not here and agencies that are underfunded, among others. We have to compete for funds with other states and have no representation in Congress to do that.
Should we become ELA Soberano, it would be the other way around; many federal agencies would leave the island and current federal jobs would be lost.
CB: Many people believe property taxes will be increased once we become a state…
Romero Barceló: The federal government doesn’t collect property taxes; the states are the ones that collect them. The federal government collects import duties, income tax, corporate and some excise taxes.
CB: Do you believe that under ELA Soberano there will be a substantial reduction of federal funds coming to Puerto Rico?
Romero Barceló: Most definitely. Eventually, we won’t get any funds; it would be as if we were any foreign nation.
CB: Would the same thing happen under independence?
Romero Barceló: Yes, independence and ELA Soberano are the same thing. Right now, we get three times as much federal funds as Israel does, and Israel is a very important strategic ally.
CB: Many believe that if we become a state, Puerto Ricans will be economically overwhelmed by double taxation—federal and local. Could you explain what would happen with taxes under statehood?
Romero Barceló: Under statehood, funds coming to the island for Medicaid and Medicare, and discretionary funds that aren’t specifically targeted, among others, will increase by billions. With all these available funds to Puerto Rico, we won’t have to collect income tax; the government will have enough income from the economic activity these funds will generate to make up for income tax.
While we have federal credits in Puerto Rico, the states have deductions. In Puerto Rico, if you have income subject to federal taxation, you deduct local taxes paid from the federal tax amount. The states have deductions, which means that whatever tax you paid at the state level, you deduct it from your income and then pay federal taxes based on that final amount.
Florida, which offers much better services to its residents, including medical, doesn’t have income tax; their earnings are based on property tax. You pay a percent of the value of your property. There is a big probability that if Puerto Rico becomes a state, federal taxes would be phased in gradually, not all at the same time, and we could lower local income tax at the same rate.
The problem is that this administration has placed an obstacle to statehood with the middle and upper classes. It has lowered taxes to such low levels that these segments might end up paying more under the federal tax system and [therefore] probably oppose statehood.
CB: How would citizenship be affected under ELA Soberano and independence?
Romero Barceló: There would be no U.S. citizenship by birth under any of those formulas. Congress doesn’t have jurisdiction under any of these formulas, so there would be no citizenship by birth. People that already have the citizenship could retain it, but they would have to bring their children to the U.S. embassy and apply for citizenship for them. Also, under those formulas, Congress could implement conditions to those who already have citizenship, like coming into U.S. territory periodically in order to retain it. If you swear allegiance to the new country, you could also lose it.
We would lose all the federal jobs in Puerto Rico.
CB: What about representation in Congress?
Romero Barceló: People don’t understand the importance of representation. Senators have a lot of power. One senator can stop a bill in Congress.
CB: What about language?
Romero Barceló: The U.S. is becoming bilingual. There are a lot of Hispanics; in areas like Miami there are places with signs that say Spanish is spoken here. In the school system, Spanish is taught as a second language. Many states also publish official material in both languages. If you are bilingual, you have better opportunities at commerce, jobs, etc. «English Only» supporters are swimming against the tide; there is a lot of prejudice involved.
English is the most adaptable language, and that is why it is the most used across the world.
CB: Many feel it would be difficult for Puerto Rico to be accepted as a state because we would be perceived as a welfare state, and it would be a drain on the federal budget…
Romero Barceló: Puerto Rico is perceived as a welfare state because our economy is weak. As soon as we get the opportunity to develop the economy with the advantages statehood will bring, we won’t be in that situation.
We are [U.S.] American citizens. How much are Puerto Ricans’ rights worth? Congress can’t tell us we can’t get the same rights because we are poor.
CB: Is there a risk with this plebiscite?
Romero Barceló: This isn’t a petition to Congress; it is just a local referendum. The danger is that if we vote that we want to stay as we are, we are sending a message to Congress that we don’t want to improve our situation.
Hernández Colón’s advice on status
CB: We have a first question [in the Nov. 6 status referendum]: A «yes or no,» on whether the people want to remain in the current status. Talk about that first question and what it implies.
Hernández Colón: The «yes» vote establishes that the voter wants to keep the relationship we have today with the U.S. The «no» establishes that the voter wants to change that relationship.
The way this first question is phrased won’t necessarily resolve the deficit of democracy Puerto Rico has today. It can establish a base that allows for this to be attended to, but it isn’t a mandate to resolve this problem. We can tell the U.S. we want to keep our relationship. This relationship has a deficit of democracy because we don’t participate with our vote in the federal realm. Even though we say we want to maintain this relationship, and that is what we are saying with the «yes» vote, we and the U.S. government can still find a way to overcome this deficit. However, it isn’t a mandate with this vote.
CB: The second vote offers three options for a change in political status: Statehood, ELA Soberano [sovereign free association] and Independence. In the most basic terms, let’s go, one by one, and explain what each one means and then give readers a roadmap of what happens next if the majority of the people vote for each one of these.
Hernández Colón: The sovereign free associated state [ELA Soberano] is the same as independence, except that once independent, Puerto Rico would negotiate the terms of its relationship with the U.S. The fruit of this negotiation would create what would be called the sovereign free associated state. The U.S. doesn’t have to accept this. The U.S. doesn’t have to accept anything. In practical terms, this is like renouncing things we already have, and then ask for them in a future negotiation. It’s absurd. These negotiations imply an independent Puerto Rico, and the negotiations would be to set the conditions under which Puerto Rico is independent. These negotiations could take years.
However, we are talking about this hypothetically. The people of Puerto Rico would never vote for independence. What’s happening now with the polls [in which the sovereign free associated state is in a tight race with statehood as the leading status option under the second question] shows that people are confused about what the ballot says. If they understood what it said, they wouldn’t support the sovereign free associated state. A vote for ELA Soberano means we have to renounce our U.S. citizenship and our participation in federal funding programs so that later, we can negotiate to ask for these things back. There is no way that this option would get even 20% of the votes.
Independence is even worse. We would separate ourselves from the U.S. and be an independent nation like the Dominican Republic or Venezuela. We would have the same relationship with the U.S. as other independent nations. We couldn’t have a better relationship than any one of the foreign countries, or a special unique relationship, because the U.S. inserts «most favored nation» clauses in every free-trade agreement it enters. We have to enter into a relationship with the U.S. under the same terms and conditions as all other outside countries.
My position is to vote «yes» on the first question and nothing else because Commonwealth as an option doesn’t appear on the second question. This is the institutional position of the Popular Democratic Party [PDP]. The sovereign free associated state isn’t the same as Commonwealth. Under ELA Soberano, there is neither citizenship nor federal programs. It’s not just me saying this. This has been studied in Congress, which put out a report that said clearly that the sovereign free associated state (also called free association) is independence. Regarding statehood, it’s true that it will take time to get to
statehood. Without a doubt, with a small majority supporting statehood, it will take an even longer time to get statehood. A decision like this, which charts a future course, has to have clear and strong support of integration to keep us there. This isn’t something we can enter and then leave. It has to be solid support.
Having said that, what worries me most about this plebiscite in particular is that this is a petition to start asking for statehood now, even though it will take a long time to obtain it. If statehood and the New Progressive Party [NPP] win, for the first time in our history, we would be electing a government that has a mandate to ask for statehood, and the government will begin asking for it.
This is very bad for Puerto Rico. It’s very bad because it would put statehood on the horizon for Puerto Rico from the point of view of Congress and the U.S. in general, as well as potential investors in business in Puerto Rico and in local bonds. They will be taking notes that this is the path that Puerto Rico is taking.
One of the immediate effects of this will be to affect efforts to win passage in Congress of the new Section 933-A tax incentive meant to replace Section 936 because it isn’t compatible to be seeking statehood and at the same time something that isn’t possible under statehood. This is a problem. An investor looking at Puerto Rico will calculate the profitability of the investment looking toward the future, taking into account that in a few years, statehood will possibly enter the picture and affect the investment. When looking at these future benefits over a number of years, the investor will have to calculate how the changing tax environment will affect those investments.
All this is negative for investment in Puerto Rico. That’s why I think this will be a move that will damage the economy of Puerto Rico. There are other possibilities that are worse.
In 98% of the cases, the first step toward statehood has been incorporation before being admitted as a state. If Puerto Rico were taken down this road, we would fall into a situation where they would apply federal taxes without giving us a vote for president and Congress. Yes, we would get parity in the few federal programs that we don’t now have, I have to say that. That’s what we would get as an incorporated territory. From an economic and political point of view, this would be a bad deal for Puerto Rico.
CB: How probable would that be given the growing political power of Latino voters in the U.S.? Could Puerto Rico remain in political limbo for a long time given the political power of Latinos and Puerto Ricans living stateside?
Hernández Colón: I don’t believe that the increase in the Latino vote favors statehood for Puerto Rico. I’ll explain. The Puerto Rican segment is small within the Latino voting coalition. It doesn’t account for more than 10%. In certain states in particular, it has more power, but when you take into account all the U.S., it isn’t very large. The U.S. Hispanic population has origins and concerns that are very different from those of Puerto Ricans. To begin with, we are born U.S. citizens. The theme of immigration for us is a theme where we are sympathetic to those who are affected by discriminatory laws, but it isn’t something that affects Puerto Ricans personally. The interests of the distinct Latino voter blocs aren’t interests that will establish a basis for statehood for Puerto Rico. They have their own interests. If we look at this from the point of view of total political power of the Hispanics in the U.S., Puerto Rico represents one solid bloc of voters for the president and U.S. Congress. On top of being Latinos, they are Puerto Ricans. Strengthening this coalition won’t do much from the point of view of opponents of statehood, who are largely Republicans. They can include something about statehood in their platforms 20 times, but this is lip service. When it comes time to vote, Democrats, in general, support statehood and Republicans oppose it. Very few Republicans have voted for Statehood.
Let me tell you something I experienced personally. I lived that when we were trying to get the plebiscite bill approved during the 1988-1992 term. We won approval for it in the U.S. House of Representatives, but it got stuck in the U.S. Senate. There was a vote in the U.S. Energy Committee of U.S. Sen. J. Bennett Johnston. Don [former Gov.] Luis [A.] Ferré was present there supporting statehood. He had gotten President George H.W. Bush to write a letter to the Republican senators of this committee to vote in favor of the bill. The Republicans defeated the bill. I looked at the face of don Luis Ferré there. His people were the ones who defeated the measure. There is a force in the U.S. that doesn’t want statehood for Puerto Rico, and they will fight it forever. Seeing this as part of a Latino coalition that is also fighting this force doesn’t benefit statehood.
From the point of view of not imposing cultural or linguistic requisites on statehood, that’s a different story. Leaving aside the other political considerations, the Hispanic coalition would provide support. It could say don’t dare put conditions, like you did on New Mexico, Oklahoma and Louisiana, where they spoke French, on a state of Puerto Rico. The Hispanic coalition could help. But there is the political factor, and the political factor you have to battle. There is no political environment to pass statehood for Puerto Rico. Lip service you will see, though.
The opposition to statehood won’t openly exhibit discriminatory prejudice. The opposition will use things like the economic theme, for example. I will tell you about the economic damage statehood could do to Puerto Rico. But from the point of view of those over there and those who will oppose statehood, they will say that Puerto Rico has a structural deficit. Puerto Rico has a high unemployment rate. Puerto Rico has a debt load of so many billions of dollars. They will say Puerto Rico can’t assume the burdens of statehood; let’s wait until we improve this situation. That is the argument they will use because it is politically correct.
CB: If the ELA Soberano option wins, what message would that send to the U.S. Congress?
Hernández Colón: Political power in Puerto Rico will be determined by who wins the election, and no party that will win will have a governor or resident commissioner who supports the sovereign free associated state. If «yes» wins and the sovereign free associated state wins, the PDP won’t ask the U.S. for the sovereign free associated state. The pro-Commonwealth party has already said not to vote for it. They would be fooling the people because the sovereign free associated state isn’t Commonwealth.
CB: While PDP President Sen. Alejandro García Padilla backs a «yes» vote and leaving the rest of the ballot blank, other members of the PDP say they will support the «yes» vote and the ELA Soberano.
Hernández Colón: These are the same people who added a dimension to the defeat the PDP suffered in 2008. Those saying these things now lost even more votes for the PDP in the last election.
CB: You stated in one of your columns that if entering in the path of incorporation, Puerto Rico would have to make budget cuts while transitioning to the arrival of federal funding. Is that the only scenario you see?
Hernández Colón: The column stated that the budget cuts needed to phase in federal taxes would lead to drastic reductions in all services, including education, health, safety and investment in infrastructure. Our economy would stagnate because of the lack of these services and investments. Interest rates on our bonds would rise after losing a triple tax exemption, among other things.
That’s what will happen if Gov. Luis Fortuño and statehood win. He will go to Washington to lobby for statehood and the resident commissioner will present a statehood bill because they have the mandate. And that leads to a very serious consideration about statehood. And a serious consideration requires the fiscal issue to be faced, and that Congress should be informed about how Puerto Rico is going to assume those federal taxes that statehood is going to bring.
And for that, it is necessary to undertake such a fiscal exercise. Now, it isn’t going to happen immediately because surely statehood isn’t going to come in the next four years. But it already affects the investment environment. That’s what I mean. Let’s work with what we have because we have the best conditions and opportunities to go ahead. Because that change won’t arrive.
CB: Let’s talk about taxes under statehood. A lot of people say Puerto Ricans don’t have enough money to pay taxes…
Hernández Colón: The majority of the people in Puerto Rico are part of the 47%. It is that way. Now, we have a very productive sector. Here we have businesses, professionals and a sector that will have to assume that burden. They will have to carry it on their backs. And you can dismiss the issue politically, saying the majority of the people who voted won’t have to pay those taxes, but what about the others? And you have to see how everybody suffers when their businesses and the economy are affected.
CB: Is there an offset of the taxes?
Hernández Colón: There is an offset, in terms of programs where there isn’t a parity that will bring billions of dollars. But that responds more to social interests, and won’t go toward generating jobs or investment. The job creation is going to be affected when you impose those taxes on the productive sectors of Puerto Rico. Then, what do you win if you get some funds for social interests but you hurt the productive sector, making job creation more difficult.
Let’s put it this way. If Puerto Rico becomes a state, the government of Puerto Rico will have to offer the same services and fulfill the same tasks that it is doing nowadays. The only difference is that it will be called state government. The federal government will also be doing the same job it is doing right now. But we will have to pay the taxes that correspond to that government. And we will have to pay the ones that already are our responsibility. That is the situation. Now, I have no knowledge about, and you can correct me on that, an offset in which you can deduct from the federal tax what you have paid in state taxes. That I don’t know.
CB: What about federal funding programs such as Medicaid and Medicare? If Puerto Rico gets parity, we’re talking about a significant addition in the amount of federal funds. Also, statehood could help us do better in federal procurement when, today, we receive a very small amount of contracts in a $500 billion annual market.
Hernández Colón: Well, with more political power, our situation could improve. But we are talking about employment. And Medicaid is a social help that generates very little jobs. The job creation is very limited.
CB: How do you see citizenship under ELA Soberano?
Hernández Colón: That’s nonsense. Those who have free association don’t have citizenship. In the Northern Mariana Islands what they have is a commonwealth. They don’t have the sovereign free associated state. Now, Micronesia and Palau have a free association like the sovereign free associated state, and these people don’t have citizenship.
CB: The ones who currently are citizens would continue being so, but how would it be for those born afterward?
Hernández Colón: Game’s over.
CB: Tell us a little about our political power under statehood. If this should turn into a state, why is it important to have two senators? Don’t you think that would give Puerto Rico a great tool to achieve certain things?
Hernández Colón: Some things like the ones we were talking about earlier would improve. A senator could go to a federal agency, in terms of contracts, and say, «Hey, you aren’t giving enough to Puerto Rico…,» those kinds of things, yes, sure. However, that kind of political power that would contribute the most is diminishing because it has turned into a bad word. It is what is called earmarks, which are pet projects of the legislators for their states or districts. That is being done less and less, and it wouldn’t represent something of importance to Puerto Rico.
The most important thing statehood would bring would be through the change in constitutions, and it would be for both good and bad. We would get automatic parity in federal funding programs, but we will also get automatic federal taxes. That’s why I say the change will be for good and for bad.
Empowerment will really consist in being able to participate in decisions on a national level. And as those national decisions favor a wide part of the country, only in that way, would they also favor Puerto Rico. For example, Obamacare. Let’s say there are two Puerto Rican senators that back Obamacare and Obamacare is approved. Well, that would benefit Puerto Rico as it would the rest of the nation.
And in that sense, it would be good for us. Now, that’s happening in the context of the legislation that is being approved right now without the need of us being there as a state. With Obamacare, we are benefiting from national legislation without having the need for us to have a senator or two there.
CB: The Democratic Party platform talks about Puerto Rico’s political status as something that is holding us back politically and socially. They say it’s time to resolve this, and if Puerto Ricans don’t send a clear message, then the president and Congress should take action on that. How do you respond to that statement?
Hernández Colón: That is an erroneous interpretation of the issue. The problem isn’t the status, nor the relationship we have with the U.S. The problem is the political conflict that takes place when we try to change that relationship. One [stands] for statehood, one for independence, and one to ignore what there is. That political boiling over is what hurts. Now, if we are all at peace with Commonwealth, and keen to work to improve it, I tell you, it would be a different story.
CB: Is that possible under Commonwealth?
Hernández Colón: Well, that’s politics. We’re in a democracy and in a democracy we have to live with politics [laughs].
CB: Carl Friedrich thought Puerto Rico must give a bigger contribution to the federal Treasury to achieve greater autonomy.
Hernández Colón: [Former Gov. Luis] Muñoz [Marín] also thought that. And if you want to develop the Commonwealth integrally, you have to think that. But that kind of thinking isn’t on the table in this plebiscite. It’s either we continue the way we are, or we change toward more radical alternatives. Statehood implies a very fundamental change. And the two types of independence are also very radical.
CB: About 40 years ago, in a hearing before you, Friedrich stated, «I am very much afraid that if the Commonwealth is treated as something which it is, as it is now, it will leave the proposal for futuristic developments to those advocating other solutions.» Is that what is happening now?
Hernández Colón: In my life, there are those things that I did that show how there were attempts to make Commonwealth better and not leave it as it was. There, you have the Nuevo Pacto [Enhanced Commonwealth] proposal that President [Richard] Nixon backed, but it didn’t pass in Congress because I lost the next election. And everything I have done after that, efforts that we have made and efforts that have reached far. Not superficial things. Now, why haven’t we achieved those changes? Because, here, we go to plebiscites, we struggle in them, the people’s mandate is given, and what do the Puerto Ricans do? They go to Washington to prevent that mandate from being fulfilled. The Nuevo Pacto, don Luis Ferré, as well as Carlos Romero Barceló, fought against it. From the first moment, they, inside the White House, fought against it. They went to Congress and fought against it. They looked for Republicans to be against us. Eventually, they won, because they won the election.
If you ask yourself why is it that this hasn’t been able to grow, it is because here we make decisions and then the losing team looks for its allies in Washington and moves the government there so they don’t give you what you are asking for. That explains it.
CB: The decision in the case of Billy Jo Lara, the case of the Native American reservation stating there could be some perfections toward some special sovereign states, such as reservations, or as in the case of the Commonwealth. It is often cited by people in the PDP to illustrate that a Commonwealth status could be improved in a constitutional framework. What is your perception of that?
Hernández Colón: There are many judicial paradigms to perfect commonwealth that could be used as models including that one. But this is something political. Political here, political there. So it could transform into a political struggle in which sometimes you use legal principles to sustain something that is really political.
The political element is an impediment to reaching anything. It is a handicap to anything, to reaching statehood, to perfecting Commonwealth, to reach anything. There are forces which oppose change, and that’s politics. CB: You were recently in Florida, I believe campaigning with Carlos Romero Barceló for President Obama. What is your perception of the understanding stateside on Puerto Rico’s status and the plebiscite?
Hernández Colón: Same as here. There is some confusion about how to vote. There are people for Commonwealth, people for statehood, and a few for independence; I found two or three, some of them very vocal [laughs]. They are interested in what would happen in the plebiscite, and one or two told me they would come here to vote.
CB: And how do we perfect Commonwealth. What changes are necessary?
Hernández Colón: If you ask me what changes I would make, they involve economic aspects, changing laws that have an impact on our economy. For example, the minimum-wage laws. I think the minimum wage is a great evil to economic development. It is good for those who have a job, but for the ones who are outside the workforce, and this country has the world’s lowest labor [-force] participation rate, it is a problem. As Muñoz Marín used to say, «The worst wage is no wage.» Also, the costs from regulations regarding job safety and the environment. We need flexibility to lower production costs in Puerto Rico.
These kinds of variables are important and we have to learn how to work with them if we want to make a better Commonwealth in economic terms. Regarding the perspective of federal programs, I would seek a concept that allows federal agencies to adjust their programs to the particular needs and realities of Puerto Rico.
In terms of political power, I would look for representation in the Senate or an additional resident commissioner, as we had in the Nuevo Pacto I proposed. I would try to win for Puerto Rico some participation in the appointing of federal officials that work in Puerto Rico. Basically, we would look at measures that would allow us to govern more effectively.
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Puerto Rico’s big tax problem is Commonwealth tax rates are too high. Two-thirds of families would be exempt from U.S. income tax; many federal taxes apply in Puerto Rico today.
One of the biggest economic implications of Puerto Rico’s political status is taxation. While the imposition of federal taxation under statehood is often cited by critics as a reason to avoid seeking for integration with the U.S., Commonwealth immunity from federal taxation is a myth, and the biggest tax problem facing Puerto Rico is the high amount of taxes we pay under the current Commonwealth status, according to tax experts.
Puerto Rico residents pay taxes at the federal, central Commonwealth and municipal levels. This applies to individuals and corporations, which pay income taxes, employment taxes, real and personal property taxes, and an inefficient excise tax. The U.S. Internal Revenue Code has different tax rules for the residents of Puerto Rico than for residents of the U.S. mainland. The most important of these rules is Section 933, which exempts U.S. citizens residing in Puerto Rico from paying federal income taxes on income derived from Puerto Rico sources. This exemption has nothing to do with the island’s Commonwealth status and everything to do with Section 933, which is a federal law that can be amended, phased out or eliminated by Congress at any time, just as Section 936 was eliminated. Section 933 doesn’t exempt residents of Puerto Rico from paying federal taxes on U.S. or foreign-sourced income. This includes income from many investments in U.S. stocks, bonds and investment funds. Nor does Section 933 affect the federal payroll taxes that residents of Puerto Rico pay. Federal employment taxes for Social Security, Medicare and unemployment insurance apply to residents of Puerto Rico on the same basis, and for the same sources of income, that they apply to residents of the U.S. mainland.
However, more importantly for Puerto Rico, the problem isn’t the federal income taxes but the Commonwealth taxes. If residents had been contributing their fair share of federal income and corporate taxes, Puerto Rico would be receiving more in return, in terms of federal funds and services.
The Commonwealth imposes taxes as if it were a national government, at rates higher than the states. Even with the sweeping tax reform enacted by Gov. Luis Fortuño in 2011, that is still the case, with Commonwealth income tax rates rising as
high as 33% for top earners. That nearly equals the top U.S. federal tax rates of 35%. State income taxes, by contrast, are much lower. Mississippi, for instance, has income tax rates from 3% to 5%, while in New York, state income tax rates range from 4% to 8.8%. Even California, which has one of the highest rates in the nation, taxes its top earners at 10.3%, about one-third of Puerto Rico’s top tax rate. Florida has zero taxes for individuals.
«There wouldn’t be a big problem with individual income taxes if Puerto Rico turned into a state. There will be deductions and it will “level off,» said tax specialist Karen García, who worked with Grant Thornton LLP in New York City. «Puerto Rico officials would just have to adjust their current tax tables downward.»
Puerto Rico businesses are paying more in taxes than most of their stateside counterparts, García added.
Like Puerto Rico, many municipalities and other local governments, such as counties, also levy taxes, usually in the form of property taxes, just like on the island. Therefore, this practice isn’t expected to change significantly under a change in status.
Under the federal government’s tax system, most Puerto Ricans wouldn’t pay any federal income taxes, and a majority would benefit by getting money through the Earned Income Tax Credit (EITC). In fact, two-thirds of families would pay no income tax at all and half would actually get a tax rebate from the federal government with the full imposition of federal taxes under statehood.
Moreover, residents who earned enough to have to pay federal taxes would be able to deduct from their income the amount of money they paid in state income taxes. Because Puerto Rico’s income tax rates are so high, this deduction would significantly lower the federal tax burden of high earners on the island.
Islanders who had to pay federal taxes would also benefit from many of the same deductions taken currently from their Puerto Rico income taxes, including deductions for dependents, mortgage interest payments, educational costs, charitable deductions and others.
The idea, however, is that under Statehood, the Commonwealth tax rate could be cut way down.
As a state, Puerto Rico would get instant parity in important federal funding programs, which would substantially increase the amount of federal transfers coming into the island.
Experts have estimated that federal funding to Puerto Rico—which was $21 billion in 2010—could double under statehood.
This would allow the government to lower taxes, because its funding needs would diminish with increased federal transfers. The additional federal funds would also bolster economic conditions.
Recent reports have also suggested that becoming a state in itself would also bolster Puerto Rico’s economic competitiveness by providing investors with increased stability. This, too, would allow the Puerto Rico government to lower its tax rates.
CPA Karen García is a tax expert who was in charge of all four of the New York area offices of multinational firm Grant Thornton. Prior to that, she worked as a tax expert for Ernst & Young in Puerto Rico.
ELA Soberano (free association) means independence, uncertainty and diminishing federal financial support.
The U.S. Constitution recognizes four political status alternatives: statehood, independence, free association and territories, as is the case of Puerto Rico.
Puerto Rico’s Commonwealth status was established by congressional powers provided in the Territorial Clause of the U.S. Constitution and U.S. Law 600. Free association, on the other hand, is created through the treaty-making process between an independent nation and the U.S.
The U.S. accepts free association by way of a treaty-based relationship established in accordance with the Constitution as a noncolonial, nonterritorial status alternative. These nations, while independent, have a U.S. military presence and are overseen by the U.S. government.
The people of Free Associated States (FAS) are not U.S. citizens and do not have congressional representation or a say in the economic or financial assistance provided by the U.S. Congress. Nevertheless, FAS can negotiate commercial agreements with other countries and seek membership in regional or international organizations, have representation in the United Nations and have embassies in Washington, D.C., and other countries.
Compacts of Free Association can be terminated unilaterally by any of the parties, or by mutual consent.
The U.S. recognizes the sovereign independence of three nations with whom it maintains Treaties of Free Association: the Federated States of Micronesia (FSM), the Republic of the Marshall Islands (RMI) and the Republic of Palau(RP)
For all practical purposes, the Compacts of Free Association signed with these nations provide continued control of these for as long as the U.S. desires.
Although FAS’ economic future is based on U.S. military policies and congressional decisions, what should be relevant for Puerto Rico is whether an arrangement of this nature, suitable to both FAS citizens in the Western Pacific and Congress, could meet the needs and aspirations of the more than three million U.S. citizens residing in Puerto Rico.
Puerto Rico and FAS are geographically, historically,
socially, economically and politically different. Puerto Rico lies at the crossroads of the Americas, about 1,000 miles southeast of Miami, while FAS are closertoPhilippines than to Hawaii, which is more than 2,100 miles from San Francisco. FAS’ total land mass is about 517 square miles, which is less than 5% of Puerto Rico’s.
The total population is about 220,000, compared to Puerto Rico’s 3.5 million resident U.S. citizens.
Residents of FAS are scattered over hundreds of islands and atolls where a lack of adequate transportation and communication limits opportunities for economic progress. The economic activity is primarily subsistence agriculture and fishing. Manufacturing is almost nonexistent, with the exception of some basic apparel manufacturers, and tourism is limited, with Palau receiving the substantially bigger share.
Since the Compacts of Free Association were signed with the FSM and the RMI in 1986, it is estimated that 15% of their population has migrated to Guam, the Northern Mariana Islands, Hawaii and the U.S. mainland.
FAS can’t maintain their present standard of living without the rent (for military operations) and aid from the U.S.
Despite having financial assistance from the U.S., and afforded by using the U.S. dollar as their national currency, the protection of
the U.S. military and access to the U.S. market, FAS have been unable to attract foreign investment or advance their economic development. This financial help from the U.S. has been FAS’ main source of income, with FAS governments being the largest beneficiaries so far.
THE ECONOMY OF FAS
FAS economies are relatively simple. Funds received from the U.S. are their only primary income source. The funds are used primarily to pay government wages, salaries and benefits, with another portion to develop public infrastructure.
Palau’s per capita gross domestic product (GDP) in 2008 was $7,600, in the RMI $2,500 and $2,200 for the FSM, compared to about $24,000 in Puerto Rico.
FAS’ economic dependency has converted the limited private sector into a secondary market that is dependent on the public sector. The government plays a critical role in FAS economies and has been the main employer for decades. Not only it is the provider of basic public services, but is also expected to be the provider of income and work security of the last resort.
THE NEW COMPACTS (COMPACT II)
The FSM and RMI renegotiated a new compact with the U.S. in 2004 to provide another 20 years of economic assistance (2004-2023). The negotiations also addressed defense and immigration issues. The amended compacts became known as Compact II.
A major element of the new compacts’ provisions is the termination of mandatory annual payments to the FSM and RMI at the end of fiscal year 2023 and the establishment of a trust fund to provide an ongoing source of revenue starting in fiscal year 2024. Congress had authorized and funded similar trust funds, including one for Palau and several for the RMI, as compensation for the U.S. nuclear weapons testing program.
The amount of annual grant assistance to the FSM and RMI decreases each year since it began in 2004 and ends in 2023. The FSM’s annual U.S. assistance will decrease from $76.2 million in 2004 to $62.6 million in 2023. The reduction for the RMI is from $35.2 million in 2004 to $27.7 million in 2023.
Compact II was designed to build trust funds, which beginning in fiscal year 2004 could receive annual U.S. contributions proportional to the reduction in grant assistance. The expectation was that they could yield annual earnings to replace the reduced grant assistance. This is a highly speculative proposition given that the trust funds’ rate of return depends on uncertain financial market conditions.
The FSM and RMI were required to provide an initial $30 million contribution. In designing the trust, the U.S. State Department assumed they would earn a 6% rate of return and that would have been suffi cient to cover the expiring federal contributions.
Compact II grants the U.S. government control over the trust fund’s management and requires they are incorporated in Washington, D.C. The U.S. could withhold payments if the FAS governments don’t comply with grant terms and conditions and don’t cooperate with U.S. investigations on the appropriate use of compact funds.
IMMIGRATION RESTRICTIONS
The original immigration provisions in the compact with the FAS were nonexpiring, and citizens of both nations were allowed to live and work in the U.S. as nonimmigrants— that is, individuals who are in the U.S. temporarily as visitors, students and workers and can stay for long periods with few restrictions. A congressional report identifies this status as resident alien.
Under Compact II, these provisions changed.
For example, FAS citizens entering the U.S. now need to carry a passport, and the U.S. attorney general has the authority to issue regulations specifying the conditions of their admission into the U.S., according to a General Accountability Office report. Furthermore, naturalized citizens of the FAS are, with certain limited exceptions,noneligible for visa-free admission into the US.
The bottom line is that free association has been a failed economic strategy in the Western Pacific. It is filled with uncertainties, immigration restrictions, and progressive reduction and eventual elimination of federal financial assistance. In addition, oversight by federal government bureaucrats remains under free association, and the economic future of the FAS is dependent on the volatility of the global financial markets and the abilities of fund managers under U.S. government control. It is also a relationship that can be terminated unilaterally at any time.
Like the FAS, an independent Puerto Rico could enter into a Compact of Free Association with the U.S. federal government. Among the many issues that must be addressed, however, is how the people of Puerto Rico, citizens of the U.S., enter into a treaty with a nation they are a part of, and how the U.S. could resign sovereignty over more than three million of its citizens.
Unlike Puerto Ricans, the citizens of the FAS are not, and never were, U.S. citizens.
AAA-STATUS-THE STATUS-CB-RHC-CRB
COMMENTS BY ANGEL L CASTRO, CPA, TAX CONSULTING SPECIALIST AND FORMER PARTNER OF THE PUBLIC ACCOUNTING FIRM OF PRICE WATERHO– USE & CO(NOW PRICEWATERHO– USECOOPERS,LLP), INCLUDING THE YEARS WHEN MANNY CASIANO WAS IN CHARGE OF FOMENTO.
I WANT TO EXPRESS MY CONGRATULATIONS TO CARIBBEAN BUSINESS AND ITS REPRESENTATIVES, MR JOHN MARINO AND MR PHILIPE SCHOENE ROURA, FOR THE EXCELLENT INTERVIEWS TO FORMER GOVERNORS OF PUERTO RICO, HON RAFAEL HERNANDEZ COLON AND HON CARLOS ROMERO BARCELO, ON THE STATUS OF PUERTO RICO, AND THE EXCELLENT COMMENTS OF CPA KAREN GARCIA, TAX EXPERT OF THE MULTINATIONAL FIRM OF GRANT THORNTON,LLP,WITH WHICH I PERSONALLY AND FULLY AGREE.
IN REGARD TO THE TAX IMPLICATIONS OF A CHANGE IN THE STATUS OF PUERTO RICO TO STATEHOOD, I WOULD LIKE TO ADD THE FOLLOWING COMMENTS THAT ARE PART OF AN ARTICLE PRESENTED BY ME IN THE FIRST STATEHOOD CONVENTION IN GUAYAMA, PUERTO RICO ON NOVEMBER 11, 2011. I AM ALSO SENDING COPY OF MY FULL ARTICLE WHICH WAS PREPARED IN SPANISH.
1. Basado en nuestro estudio de la Ley de Relaciones Federales con Puerto Rico, es mi opinión que una nueva Ley Habilitadora de la Estadidad para Puerto Rico deroga y sustituye automáticamente la actual Ley de Relaciones Federales con Puerto Rico y, en consecuencia, deroga también automáticamente la Ley de Contribución Sobre Ingresos y la Ley de Arbitrios que están actualmente en vigor y que forman parte del Código Actual de Rentas Internas de Puerto Rico en sus Subtítulos A y B. El Estado de Puerto Rico puede entonces localmente y a su discreción, adoptar o no adoptar una nueva Ley de Contribución Sobre Ingresos estatal y una Ley de Contribución Sobre Ventas (Sales Tax), para lograr que realmente cambie por completo el arbitrio sobre importaciones, incluyendo los autos, a un impuesto sobre el consumo, real, razonable y bien administrado, y que opere en forma armonizada con las leyes de impuestos federales en vigor y en línea con la legislación actualmente vigente en los demás Estados de la Unión. En esta forma se reforma y se ajusta nuestro sistema contributivo estatal en base a las nuevas necesidades de recursos del Estado contando con las asignaciones federales y otros recursos para confeccionar un Presupuesto equivalente y comparable a los Presupuestos de los demás Estados, y sobre las bases, especialmente de los Estados más comparables con Puerto Rico en tamaño, población, naturaleza, actividad económica y otros factores, como lo son Florida, Hawaii, Conneticutt, Rhode Islands y otros.
2. En mi opinión también terminan los Arbitrios sobre los automóviles y otros productos que se importen de los demás estados porque nos aplicaría en su totalidad la Cláusula de Uniformidad de la Constitución Federal.
3. Como todos sabemos, ya hoy tenemos y se puso en vigor una Ley de Impuestos Sobre el Consumo y Ventas (Sales Tax), conocido como “IVU”, pero que necesita revisión y mejor implementación y fiscalización para lograr sus objetivos y poder entonces eliminar por completo la contribución estatal sobre ingresos, por lo menos a los individuos.
Lo antes expuesto es prueba innegable y contundente de que, a pesar de continuar rezagados por lo menos por un 50% en nuestro desarrollo económico dentro de nuestra Nación desde el cambio de soveranía en 1898, y con mucho menos ingresos “per capita” comparado con el Estado más pobre de la Nación (Mississippi), hemos estado viviendo bajo un sistema tributario mucho más oneroso que el que ofrece nuestra Nación y los Estados. Esta situación de mantener un sistema contributivo como instrumento de castigo al contribuyente que lo empobrece aún más y retarda, y ha retardado por muchos años, el desarrollo del país, se ha mantenido por más de 100 años en nuestro Puerto Rico, más de un siglo, en detrimento de nuestra gente y nuestro Pueblo, a través de un discurso político y politiquero masivo, engañoso y sin base alguna de los políticos egoístas que buscan sólo controlar las masas para fines de conveniencia personal de politiqueros sin escrúpulos, con información tergiversada sobre asuntos que dichas masas de ciudadanos, por lo general, desconocen.
Pero lo peor del caso es que estos politiqueros egoístas y sin escrúpulos saben las verdades y realidades que aquí hemos expresado, pero le dicen y le repiten, y le repiten de nuevo y le siguen repitiendo a usted, lo contrario, como “Mitos y Mentiras” para que con la repetición, usted lo crea, bajo la teoría aquélla, que creo era de Hitler: que una “Mentira” repetida y repetida masivamente, llega a convertirse o pareserce a una “Verdad”. Pero estas son sólamente teorías políticas malsanas. Simplemente no las creas y no se deje engañar.
Evalúe usted mismo con su propio criterio, amigo lector, los hechos sobre el sistema contributivo oneroso que nos han impuesto y que quieren perpetuar contra nuestro bienestar, tratando de evitar que escoja usted la Igualdad de Ciudadanos bajo la Estadidad que nos brinda un sistema contributivo mucho más justo y equitativo, especialmente para los pobres y la clase media y trabajadora. Tome decisiones completamente informadas para el beneficio de usted, su familia y todos sus amigos y demás seres queridos y del
futuro de Puerto Rico y nuestras futuras generaciones. No necesita usted discursos politiqueros para tomar sus decisiones. Lo que necesita es ver y estudiar los hechos con su propia inteligencia y criterio, en los cuales el Autor de este Artículo cree, confía y respeta.
Yo, personalmente, confío en usted, amigo lector, y apuesto a usted… y a su inteligencia y sentido común. Que Dios nos bendiga a usted, a su familia y a todo Puerto Rico como parte de nuestra:
“UNION FEDERAL DE ESTADOS SOBERANOS”
de los Estados Unidos de América
4. Contribución Sobre Propiedad
La Contribución Sobre la Propiedad (el celebre CRIM), no la impone el Gobierno Federal en ningún Estado de la Union, ni en Puerto Rico. Esta potestad no está dentro de las facultades del Gobierno Federal. Esta contribución la impone la Legislatura de cada Estado y es su prerrogativa, igualito que en Puerto Rico. No tiene que ver absolutamente nada con que nosotros escojamos la Estadidad como nuestro Status Político Final No Territorial Ni Colonial y el que más nos conviene en todos los aspectos, incluyendo el aspecto contributivo sobre ingresos, como se refleja en las comparaciones que presentamos en las Tablas presentadas en nuestro Artículo de referencia y luego resumidas en dicho Artículo en un RESUMEN Y COMPARACION FINAL, QUE CLARAMENTE REFLEJA Y CONCLUYE QUE EL COSTO CONTRIBUTIVO DE VIVIR Y TRABAJAR EN PUERTO RICO HOY ES MUCHO MAYOR QUE EN CUALQUIER ESTADO DE LA UNION, A CUALQUIER NIVEL DE INGRESOS, Y MIENTRAS MAS ALTO ES EL INGRESO TOTAL, MAYOR ES LA DIFERENCIA CONTRIBUTIVA.
Los argumentos erróneos y los discursos politiqueros sobre las contribuciones (CRIM) de sus residencias y que puedan perder la exención del CRIM que disfrutan sus hogares en Puerto Rico, son puros “cuentos de camino” de los políticos politiqueros que pretenden engañarlos para conseguir su voto para perpetuarse en el poder y para mantenernos en la Colonia Territorial que a ellos les conviene como políticos y politiqueros y para sus bolsillos.
Al que le venga con ese cuento, pídale que se lo demuestre con evidencia y no se deje convencer sin que le presenten la prueba, y verá usted que no pueden presentarle nada. De hecho, en el Estado de Florida, hay una exención para los hogares de vivienda principal mayor que en Puerto Rico y los envejecientes tienen una exención adicional, y en otros Estados hay exenciones aún más altas de acuerdo a lo que decide cada Legislatura Estatal como también tenemos hoy y mantendremos también como Estado de la Unión.
5, Arbitrios Sobre Importaciones Desde los Estados Unidos Continentales
Los aranceles o arbitrios impuestos sobre importaciones y exportaciones entre Puerto Rico y los Estados Unidos Continentales bajo la Ley Foraker duró sólamente hasta el 1 de marzo de 1902 promulgando así el libre comercio entre Puerto Rico y los Estados Continentales. Como dijimos anteriormente en este Documento, bajo su Artículo 3, la Ley Jones expande la autorización para legislar e imponer impuestos localmente sobre “ingresos, sobre la propiedad, rentas internas, licencias, franquicias, privilegios, concesiones y otros”, cuando dichas contribuciones sean para fines de operar los gobiernos estatal y municipales por disposición de la Legislatura de Puerto Rico. Esta autorización se ha interpretado por el Tribunal Supremo de EE. UU. como que abilita a Puerto Rico para imponer arbitrios sobre artículos introducidos a Puerto Rico, incluyendo el arbitrio abusivo sobre automóviles, aún cuando sean importados desde los Estados Continentales. Véase el caso de “West Indies Oil Co. (Puerto Rico) v. Domenech”, Treas., 311 US 20 (1940). Es mi opinión que cuando nuestro Puerto Rico se convierta en un Estado de la Unión, estas importaciones no estarían sujetas a dichos arbitrios bajo la Cláusula de Uniformidad de la Constitución Federal que entonces le aplicaría totalmente a Puerto Rico, y no parcialmente como al presente. La Ley de Arbitrios local quedaría derogada automáticamente al derogarse la Ley de Relaciones Federales con Puerto Rico como consecuencia de implementar la Ley Habilitadora de la Estadidad.
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