For decades, Puerto Rico has attracted to its shores mainland U.S. citizens in search of warm weather, pristine beaches and a cheap lifestyle.
With the announcement earlier this year of a campaign to promote tax incentives in the U.S. commonwealth, Puerto Rican officials are now hoping to attract billionaires along with beach bums.
Thanks in part to its pitch of gorgeous beaches, excellent private schools and low taxes, Puerto Rico has already attracted a number of millionaire hedge fund managers and business executives. Island officials claim that another 40 people have applied to move to the Caribbean tax haven, according to the New York Times.
While rumors that billionaire hedge fund manager John A. Paulsen was eyeing a move to Puerto Rico turned out to be unfounded, the island still hopes to make it the favored low-tax destination for Americans – over places like Ireland, Singapore and Switzerland.
“It’s a very good lifestyle… together with the fact that you do not pay taxes, which is completely legal,” Alberto Bacó Bagué, Puerto Rico’s secretary of economic development and commerce, told Bloomberg Television.
To qualify as a resident of Puerto Rico, a person need only live on the island for 183 days a year and unlike other tax havens – Switzerland, for example – Americans moving to the island don’t have to relinquish their citizenship.
With a per-capita income of about $15,200 – half that of the U.S.’s poorest state Mississippi – Puerto Rico has in the past used tax perks, especially in manufacturing, to support its economy. These new perks, however, move away from the traditional manufacturing and into financial, legal, and other services.
In other words, Puerto Rico hopes to attract high-profit businesses without the space used by manufacturers. An influx of billionaires, or even millionaires, would give a huge bump to the island’s economy, which right has an unemployment rate of more than 13 percent and was downgraded in December by Moody’s Investors Services to one level above junk status.
Puerto Rico’s tax move comes as Florida has also begun to woo wealthy individuals to a state that does not have a state income tax.
Affluent individuals have recently voiced their anger because they feel they have been targeted by disproportionately high taxes, while their lawyers warn them that they may appear unpatriotic to politicians if they are seen to be tax dodging.