"How do you explain the concept of property tax and school tax to people who have never paid either?"
Excuse me, my fellow American. That Puerto Rico is a tax-free heaven is just another myth.
To start with, the only tax from which taxpayers in Puerto Rico are exempt from is that on IRC section 933 income. Pretty soon here a troll named 4Freedom is going to raise the issue of IRC S. 936 companies or Controlled Foreign Corporations. These tax shelters have been in the process of being faced out for the last ten years. At the sound of midnight this coming 12/31, they will cease to exist altogether.
Puerto Rico taxpayers, employees and employers, pay FEDERAL Social Security taxes at the same rate as those on the mainland, but the return on those taxes are capped by Congress below mainland levels.
Puerto Rico employers pay into FUTA or federal unemployment tax at the same rate as those on the mainland, again, for only a fraction of the return as compared with mainland employers.
All property owners in Puerto Rico pay property taxes. We pay on real estate, we pay on inventory.
All businesses pay a tax on their gross sales to the municipalities, after paying an income tax to the "state".
Other than no personal federal income tax, the only advantages here is that there is no death tax or estate tax.
And, again, the federal personal income tax exemption extends only to SOME Puerto Rico-generated income. And that income is taxed to the jing-jang by the local government. 35% in my case.
I would swear that we had this exact same conversation almost a year ago to the date. How often does the subject of the status vote come up? It can't be every year.
Just a side note. I don't know how often you get up to the Toro Negro region or the Spine, but theres a few Castro sympathizers up there. What do you think they're up to?
Exactly. In my case my overall tax burder was going to go up. There may be some tax advantages for businesses there (as you say, most of them have been phased out) but for ordinary workers taxes there are not low.
Its worth it, though. Its a nice place to live.