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How dependence on corporate tax breaks corroded Puerto Ricos economy
Source: Reuters
Puerto Pobre
How dependence on corporate tax breaks corroded Puerto Rico’s economy
By Nick Brown
Filed Dec. 20, 2016, noon GMT
The island bet on multinational manufacturers, who bailed when the U.S. repealed a key tax incentive. Meanwhile, frustrated local entrepreneurs fled to the mainland.
[font size=1]-snip-[/font]
The island’s historic dependence on mainland corporations – and the tax breaks needed to retain them – underpins its latest economic meltdown and its descent into the largest municipal debt crisis in U.S. history.
The strategy calcified over decades into political and cultural norms. Longstanding economic policies tend to favor outside corporations over local upstarts, and island universities are just now learning to teach business students how to start ventures after decades of training them for middle management.
A dysfunctional local bureaucracy further undermines business formation. Dozens of interviews with business owners, advocates, officials and economists, reveal a government that holds up routine permits and payments to government contractors for months or years.
One education consultant said he lost a $12 million government contract due to payment delays; another entrepreneur scrapped plans for an assisted living facility because of a five-year wait for permits; food truck operators are required mountains of government forms to work a single festival.
[font size=1]-snip-[/font]
How dependence on corporate tax breaks corroded Puerto Rico’s economy
By Nick Brown
Filed Dec. 20, 2016, noon GMT
The island bet on multinational manufacturers, who bailed when the U.S. repealed a key tax incentive. Meanwhile, frustrated local entrepreneurs fled to the mainland.
[font size=1]-snip-[/font]
The island’s historic dependence on mainland corporations – and the tax breaks needed to retain them – underpins its latest economic meltdown and its descent into the largest municipal debt crisis in U.S. history.
The strategy calcified over decades into political and cultural norms. Longstanding economic policies tend to favor outside corporations over local upstarts, and island universities are just now learning to teach business students how to start ventures after decades of training them for middle management.
A dysfunctional local bureaucracy further undermines business formation. Dozens of interviews with business owners, advocates, officials and economists, reveal a government that holds up routine permits and payments to government contractors for months or years.
One education consultant said he lost a $12 million government contract due to payment delays; another entrepreneur scrapped plans for an assisted living facility because of a five-year wait for permits; food truck operators are required mountains of government forms to work a single festival.
[font size=1]-snip-[/font]
Read more: http://www.reuters.com/investigates/special-report/usa-puertorico-economy/