PUERTO RICAN SELF-SUFFICIENCY AND PROSPERITY
(Saving the Gem of the Caribbean)
Following are specific solutions to the most critical problems facing Puerto Rico:
1. FINANCIAL STABILITY: Puerto Rico must be freed from vulture hedge funds and opportunistic investors by making it eligible under Chapter 9 of the U.S. Bankruptcy Code. This would facilitate a settlement with these creditors.
A sum of $3 Billion Dollars has been proposed as Federal aid to Puerto Rico at this time.
Rather than having this aid benefit vulture investors, it must be conditioned and dedicated to a mandatory swap of low interest Federal Bonds (2% or 3%) for those held by vulture investors but at their discounted acquisition costs on a pro rata basis. These dedicated federal bonds could be resold to enable:
(a) said vulture investors to recoup their equity and
(b) Puerto Rico to repay said replacement Federal bonds at an affordable debt cost.
2. Create a Financial Stability Board to oversee and ensure fiscal stability and financial reforms, standards, and procedures.
3. JOBS AND REVENUES:
(a) A High Tech Export Free Zone Light Industrial Development Program (EFPZ).
Puerto Rico's existing Foreign Trade Zone at Mayaguez would be expanded and converted
to a EFPZ Program with the addition of several subzones each specializing in a separate category of high technology or industry (for synergy) to create jobs and revenues. Manufacturing would also have multiplier effect on service and supplier jobs. In addition, this program would encourage partnerships between industry and the Island's educational system from secondary schools through college to provide quality and relevant education and skill and apprenticeship training utilizing extant government incentive and training programs. This partnership would also provide a highly skilled and desirable work force. Products sold in the U.S. would be taxed at a preferential rate relating to job development. No tax on goods exported from these Zones.
No state or local corporate taxes. All U.S. corporations should be taxed on their global earnings at a single competitive rate without any deductions in order to prevent reversion and other tax avoidance schemes. However, capital investment should be expensed in accordance with IRS schedules. (Contact the undersigned to obtain a copy of the EFPZ proposal.)
Revenues would be obtained from sales, individual income taxes above the poverty line, Payment in Lieu of Taxes (PIILOTS) and use taxes (like tolls, fares, and license and airport fees).
(b) The Jones Act would be rescinded to provide a level playing field for transportation costs.
(c) The resort industry expansion and improvement would be incentivized.
(d) Incentivize a fishing industry expansion.
(e) The entire island of Puerto Rico would become a duty free zone to provide substantial sales tax revenues.
4. Statehood should be granted to Puerto Rico as soon as possible.
5. Citizens should demand and receive the human entitlements of universal healthcare, livable Social Security, and free public college all made affordable by a miniscule, hardly noticeable dedicated transaction tax (less than 1%) on all stock bond and derivative transfers (trillions per week).
Harry L. Langer, NYC T: 212-517-5942 E: harrylanger@hllanger.com