Stop Letting the Rich Move to Puerto Rico as a Tax Haven (Ted Cruz connection)
Now that you’ve created the next great app and your investment in your startup is worth a billion dollars, at least on paper, it’s time for a really difficult challenge: how to cash out without paying capital gains taxes anywhere in the world?
With no U.S. or Puerto Rican tax on much investment income of new residents, U.S. citizens now can pay zero tax on capital gains.
For several hundred affluent Americans over the last couple of years (including Toby Neugebauer, a key financier to Ted Cruz) the answer has been to establish a principal residence in Puerto Rico, and spend 183 days a year there.
The commonwealth is an unincorporated part of the United States, and its residents are U.S. citizens. Nonetheless, the United States treats Puerto Rico as a foreign country for tax purposes. And, unlike the case of U.S. citizens residing in genuinely foreign countries, the United States does not impose any federal income tax when U.S. citizens who are residents of the island earn income from Puerto Rican sources.
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http://www.nytimes.com/roomfordebate/2015/04/14/the-worst-tax-breaks/stop-letting-the-rich-move-to-puerto-rico-as-a-tax-haven