04/02/2014 10:10 am ET Updated Apr 02, 2014

Puerto Rico Report Feeds Statehood Debate


A report issued Monday by the Government Accountability Office estimating the costs of admitting Puerto Rico as a U.S. state hasn’t done much to settle the debate on the island.

The GAO report estimated that Puerto Rico would receive billions of dollars more in federal benefits, but the island’s residents would also have to pay far more than they currently do in federal taxes.

The federal government would have spent between $1.3 billion and $5.4 billion more in Puerto Rico in 2010 on the four social programs that would be impacted the most if the island had become a state, according to the GAO estimate.

But those benefits would come along with a much higher tax bill. Though Puerto Ricans are citizens by birth, the island’s residents generally aren’t required to pay personal income tax, which would jump by between $2.2 billion to $2.3 billion, the report says. Corporate income tax payments would soar between $5.0 to $9.3 billion.

Puerto Rican Resident Commissioner Pedro Pierluisi of the pro-statehood New Progressive Party applauded the report’s findings, saying they confirmed that statehood would allow the island to reap benefits they should be entitled to as a territory controlled by the United States.

“Statehood will provide the American citizens in Puerto Rico with full equality and democracy,” Pierluisi said in a press release. “We do not need a report to reinforce that fact. But the GAO report confirms that statehood will be mutually beneficial for Puerto Rico and the United States as a whole.”

But Puerto Rican Gov. Alejandro García, an opponent of statehood, shot back, arguing that report showed statehood would deepen dependency on U.S. government and increased taxes would prompt companies to abandon the island.

“The GAO’s findings are very concerning for Puerto Rico, our economy and jobs,” García said in a statement. “The enormous tax burden that Puerto Ricans would be forced to shoulder as a state would be incredibly damaging to our economy, our businesses and the workers on the island.”

Puerto Rico has remained a U.S. commonwealth despite holding four referendums on the island’s status since 1967.

Statehood failed to return a majority of the votes cast in the most recent plebiscite in November of 2012. The two-part, nonbinding referendum first asked whether respondents were satisfied with their relationship with the United States. Dissatisfaction triumphed. Respondents then answered whether they wanted to become a U.S. state, an independent country, or a freely associated sovereign state -- a type of independence in close association with the United States. Remaining a commonwealth was not an option on the second question.

Statehood won the largest share of the votes, but failed to win a majority of the total because more than 480,000 voters cast blank ballots on the second question, as Gov. García had urged on the campaign trail.

But Pierluisi has portrayed the referendum as a mandate for change, citing the Puerto Rican public’s rejection of the current relationship with the United States. As a non-voting member of the U.S. Congress, he filed legislation that would call for an up-or-down vote on Puerto Rican statehood if passed.

The Obama administration set aside $2.5 million to help fund another Puerto Rico status referendum as part of its budget proposal last year, and Congress later approved it.



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