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Puerto Rico files for biggest ever U.S. local government bankruptcy

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Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#371

Post by cr1895 »

martinald wrote: post #209
dustinmr wrote: post #198

Earlier quoted context omitted.

Here's a local law where if you meet all the criteria (income made off the island, spend > 180 days per year here, various other criteria), you're exempt from income taxes here. And since you're a resident, all your income is here. Effectively exempting you from federal income taxes. The idea was to attract high net worth individuals to spend money here. Every analysis I've seen says it has worked quite well.

Crazy. So if you move to PR but making money from other US based interests you get exempted from US federal income tax, but if you move and work permentantly in say Germany, you still get charged US Federal Income tax?

https://www.irs.gov/individuals/international-taxpayers/fore...

I'm not familiar with the Puerto Rico situation, but elsewhere, some (likely significant) portion of your foreign-earned income may be excluded from your US tax burden. For most people who earn money abroad this means that while you must file taxes, you likely don't pay anything to the US Gov't on foreign-earned income.

I find the whole taxation-by-citizenship thing ludicrous and coupled with the separate Foreign Bank Account Reporting for accounts having more than $10k taxes are a headache for Americans living abroad.

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#372

Post by akvadrako »

rovr138 wrote: post #325
coddingtonbear wrote: post #190

Earlier quoted context omitted.

Although Puerto Ricans do pay certain local and federal taxes, they do not pay income taxes like citizens of US States do.

Some* First, not all states pay income tax. On the other side, you have people with federal jobs that are taxed federally. Then you have other people with registered companies in the US which pay federal taxes in the US, the state it's registered in, then also pay taxes locally. -- It's complicated.

> First, not all states pay income tax.

Are you talking about states of Puerto Rico?

In the US, no states pay income tax, but residents of every state pay federal income tax.

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#373

Post by ericdykstra »

altstar wrote: post #98
mjevans wrote: post #70

Earlier quoted context omitted.

The answer to pension problems is real socialism. Produce in bulk, provide in bulk, eliminate the waste and middle-person profit by providing as much of the pension as possible directly so that the allowance for other items can be of a much smaller serviceable size.

They have tried in Venezuela. Did not work.

Who would win?

https://pbs.twimg.com/media/C-7JSI0W0AIPObl.jpg:large

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#374

Post by sebcat »

ersii wrote: post #365
Gustomaximus wrote: post #350

Earlier quoted context omitted.

Which is why Norway, Denmark and Sweden are doing so well with all their socialist programs.... so what now...? I personally feel the right answer is in the middle. Socialise whats required like health, education, emergency services, roads, pensions, etc And leave the luxuries of life as free market. As an extra touch, I would make politicians and civil servants required to use public services rather than private alt…

All three of the mention countries have pretty much free, capitalistic enterprise - which is the total opposite to what mjevans suggested. That said, there is a huge government ("public") sector and the taxation is high on most things. Especially income and consumption. Basically, all of the socialist programs that's currently going on in the Nordic countries rely heavily on taxing free enterprises (private sector) a…

> Basically, all of the socialist programs

social, not socialist.

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#375

Post by stephen_g »

grandalf wrote: post #181

When issues of local government financial problems come up, I think it's important to remember that local governments are typically not able to undertake deficit spending the way the Federal government is. If the US Federal government were prevented from running a budget deficit, we'd likely see a lot more solvency issues and financial failures of many sub-organizations within government due to bad budgeting. It woul…

Really, the Federal Government must deficit spend for the private sector to be able to save in the presence of a current account deficit. It's actually just accounting, derived from the definition of GDP itself (it's called the Sectoral balances equation, see Godley & Lavoie 2012 but also around the Internet).

If the Government doesn't deficit spend (or run large enough deficits), the only way the private sector can grow (as a whole) is by taking on more debt - which was the case before the GFC. But as soon as the lending slowed and stopped as the private sector stopped being able to take on more debt, a huge source of demand disappeared and the economy tanked. This actually very neatly explains the GFC as well as Japan's crash in the 80s, and even the Great Depression. It's no coincidence that the worst financial crashes have come after some of the most successful runs of surpluses! This was actually the main sign seen by most of the analysts and economists who warned of the GFC in the years running up to it (there were 11 identified by Dirk Bezemer in 2009 who qualified a set of conditions under their research).

Sectoral Balances explains quite neatly also why austerity never work (unless you have a big trade surplus) - the more Government spending that is cut, the more that growth is reduced. So deficits aren't really discretionary for the Federal Government, but are more determined by the economy. If you cut the deficit while the economy is performing badly, growth suffers and revenue is reduced (of course, the flip-side is that too-large a deficit would be inflationary). The deficit should approach zero as the economy reaches full employment and full capacity/efficiency - but most economies aren't really anywhere near full employment.

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#377

Post by oblio »

sebcat wrote: post #374
ersii wrote: post #365

Earlier quoted context omitted.

All three of the mention countries have pretty much free, capitalistic enterprise - which is the total opposite to what mjevans suggested. That said, there is a huge government ("public") sector and the taxation is high on most things. Especially income and consumption. Basically, all of the socialist programs that's currently going on in the Nordic countries rely heavily on taxing free enterprises (private sector) a…

> Basically, all of the socialist programs social, not socialist.

Even better, the actual platform is called "social democracy": https://en.wikipedia.org/wiki/Social_democracy

Quite a different beast.

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#378

Post by pif »

knob wrote: post #5

I have lived all my life in Puerto Rico, and as you can imagine, this issue is quite controversial. We owe money to the creditors... and what you do with a debt is to you pay it off. Yet the amount is so staggering, that I wonder if it's actually possible. As is typical, decisions by politicians placed us in this situation. Decade after decade, 4-year term after 4-year term, the government has spent money it does not…

> As is typical, decisions by politicians placed us in this situation. Decade after decade, 4-year term after 4-year term, the government has spent money it does not have. Be one political party or the other, it is the same thing.

As is typical, electors always voted for people making financially irresponsible promises, and not for people proposing to try and control the bills. Politicians are only to blame as much as voters.

Same thing happened in Italy after WW2, and we (the young) are suffering enormously for the debt contracted by previous generations.

Re: Puerto Rico files for biggest ever U.S. local government bankruptcy

#380

Post by xyzzyz »

myrandomcomment wrote: post #362
wonderwonder wrote: post #313

Earlier quoted context omitted.

The companies are more than capable of doing the math as they are signatories on the same contract. They interest rate they charge on the loaned money is based on their own internal algorithm that determines the risk of default on a particular borrower. Risk is priced into the loan. I am glad you and your family were able to work your way out of the debt you found yourself and I commend you for it. Many others are no…

I agree but that is not the case for most of this. People spend to much and run up to much debt because they are trying to keep up with the Jones. My wife was property manager for a large company. One of the properties in Orange County, New Port Beach area, had the highest rate of late payments and evictions. This is a A+ complex and has some of the highest rents for the units in the area. Guess what, those people th…

I personally know people (Not friends) that have gone through bankruptcy 2 times, doing the same stupid shit the 2nd time as the first and it does not look like anything has changed with the last.

The companies that lent them money for the second time should have gotten a clue, shouldn't they? Isn't this precisely what credit reports are for? It is definitely stupid to live over one's means and then go bankrupt, but it is just as stupid to lend money to people that have proven themselves irresponsible in the past, and so whoever lends to them should also suffer the consequences.

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