As a resident and business owner in Puerto Rico since 1971, I have been both impacted and involved in the politics surrounding the island’s status and sovereignty debate for decades. My new book, America’s Last Fortress, which launched today, February 1, 2022, has been met with considerable interest and controversy.
The reason is that the ruling wealthy class of Puerto Rico has traditionally controlled the political environment by supporting both major parties—one favoring statehood; the other favoring the current colonial/territorial political status. Each were getting about 50% of the vote and the independence party was marginalized with less than 5% of the vote.
The other major players in the political scenario have been American multinational corporations, which are on the island for the tax credits that protect their billions in profits. Through their money and influence, these multinationals have controlled both parties for many years through the Puerto Rico Manufacturers Association. Their goal? To maintain Puerto Rico as a colony so they can continue to enjoy their tax credits.
But a few years ago everything changed. The government of Puerto Rico created a law that would allow US residents to move to Puerto Rico as part time residents and not pay any capital gains taxes to the IRS on their US-based capital gains. But these new residents were not just local millionaires; they were billionaires—principals in hedge funds making a fortune in crypto currencies like Bitcoin. They found a windfall in Puerto Rico’s capital gains loophole—originally called Law 22 and later enhanced and called Law 60.
The problem is that these part-time newcomers have a lot more money than the wealthy locals and can spread their money around both locally and in Washington, DC. This allows them to keep their little tax boondoggle intact. And these wealthy part-timers from the US need not respond to the needs or desires of the wealthy local Puerto Ricans, who until recently had held tight control of the Puerto Rico political environment. The island’s independence-leaning candidates, took advantage of this squabble and developed a strategy of their own. During the last election, they garnered 58% of the vote in the race for governor. The main reason this political readjustment occurred was because the statehood party, the NPP, would cease to exist if the party actually achieved statehood. In other words, they’d lose their political clout and all the perks that come with it.
Amid all these competing interests, a powerful new player has come on the scene: China—and it’s meddling in Puerto Rico complicates things even further. Learn more about the Chinese threat, the major players and forces shaping the island’s sovereignty debate, and my take on the situation in my new book, America’s Last Fortress: Puerto Rico’s Sovereignty, China’s Caribbean Belt, and America’s National Security, now available at all major online book retailers.