Heavy debt load
In early 2017, the Puerto Rican government-debt crisis posed serious problems for the government which was saddled with outstanding bond debt that had climbed to $70 billion at a time with a 45 percent poverty rate and 12.4% unemployment that is more than twice the mainland U.S. average.[225] The debt had been increasing during a decade long recession.[27]
The Commonwealth had been defaulting on many debts, including bonds, since 2015. With debt payments due, the Governor was facing the risk of a government shutdown and failure to fund the managed health care system.[226][227] "Without action before April, Puerto Rico’s ability to execute contracts for Fiscal Year 2018 with its managed care organizations will be threatened, thereby putting at risk beginning July 1, 2017 the health care of up to 900,000 poor U.S. citizens living in Puerto Rico", according to a letter sent to Congress by the Secretary of the Treasury and the Secretary of Health and Human Services. They also said that "Congress must enact measures recommended by both Republicans and Democrats that fix Puerto Rico’s inequitable health care financing structure and promote sustained economic growth."[227]
Initially, the oversight board created under PROMESA called for Puerto Rico's governor Ricardo Rosselló to deliver a fiscal turnaround plan by January 28. Just before that deadline, the control board gave the Commonwealth government until February 28 to present a fiscal plan (including negotiations with creditors for restructuring debt) to solve the problems. A moratorium on lawsuits by debtors was extended to May 31.[27] It is essential for Puerto Rico to reach restructuring deals to avoid a bankruptcy-like process under PROMESA.[228] An internal survey conducted by the Puerto Rican Economists Association revealed that the majority of Puerto Rican economists reject the policy recommendations of the Board and the Rosselló government, with more than 80% of economists arguing in favor of auditing the debt.[229]
In early August 2017, the island's financial oversight board (created by PROMESA) planned to institute two days off without pay per month for government employees, down from the original plan of four days per month; the latter had been expected to achieve $218 million in savings. Governor Rossello rejected this plan as unjustified and unnecessary. Pension reforms were also discussed including a proposal for a 10% reduction in benefits to begin addressing the $50 billion in unfunded pension liabilities.[30][230]
Federal taxes[edit]
Though the Commonwealth government has its own tax laws, Puerto Ricans are also required to pay most US federal taxes,[1][2][3][4][5][6][7][8] with the major exception being that most residents do not have to pay the federal personal income tax.[9] In 2009, Puerto Rico paid $3.742 billion into the US Treasury.[10] Residents of Puerto Rico pay into Social Security, and are thus eligible for Social Security benefits upon retirement. However, they are excluded from the Supplemental Security Income.
The federal taxes paid by Puerto Rico residents include import/export taxes,[11] Federal commodity taxes,[12] social security taxes,[13] among others. Residents also pay federal payroll taxes, such as Social Security[14] and Medicare taxes.[15]
Only certain residents of Puerto Rico are required to file federal income tax forms. According to the Internal Revenue Service:
Employers in Puerto Rico are subject to both Federal Insurance Contributions Act (FICA) tax (a payroll withholding tax, which funds Social Security and Medicare) and the Federal Unemployment Tax Act (FUTA). Employers in Puerto Rico must withhold the employee portion of FICA taxes from their employees' wages and contribute the employer portion of FICA.[18]
| Historical population | ||
|---|---|---|
| Year | Pop. | ±% |
| 1765 | 44,883 | — |
| 1775 | 70,250 | +56.5% |
| 1800 | 155,426 | +121.2% |
| 1815 | 220,892 | +42.1% |
| 1832 | 350,051 | +58.5% |
| 1846 | 447,914 | +28.0% |
| 1860 | 583,308 | +30.2% |
| 1877 | 731,648 | +25.4% |
| 1887 | 798,565 | +9.1% |
| 1899 | 953,243 | +19.4% |
| 1910 | 1,118,012 | +17.3% |
| 1920 | 1,299,809 | +16.3% |
| 1930 | 1,543,913 | +18.8% |
| 1940 | 1,869,255 | +21.1% |
| 1950 | 2,210,703 | +18.3% |
| 1960 | 2,349,544 | +6.3% |
| 1970 | 2,712,033 | +15.4% |
| 1980 | 3,196,520 | +17.9% |
| 1990 | 3,522,037 | +10.2% |
| 2000 | 3,808,610 | +8.1% |
| 2010 | 3,725,789 | −2.2% |
| 2016 | 3,411,307 | −8.4% |
| 1765–2010[263] 2016 Estimate[4] | ||
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