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Federak taxes in US territories
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NadCixelsyd
Aug 20, 2016, 1:22:23 PM8/20/16
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While looking at some stats on Powerball, I found that Puerto Rico residents do not have to pay US income tax on lottery winnings. WTF??? After doing a bit of googling, it seems that PR residents do not pay Uncle Sam any taxes on money earned within the Commonwealth of PR. Is that true for all territories, or just PR? What's the logic here? Why should they get a free ride.
On a related note (but not a tax question), what's the net flow to/from Puerto Rico? Do more dollars flow from DC to PR, or vice versa.
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On a related note (but not a tax question), what's the net flow to/from Puerto Rico? Do more dollars flow from DC to PR, or vice versa.
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<< The foregoing was not intended or written to be used, >>
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John Levine
Aug 20, 2016, 2:32:59 PM8/20/16
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>While looking at some stats on Powerball, I found that Puerto Rico residents do not have to pay US income tax on lottery winnings. WTF???
>After doing a bit of googling, it seems that PR residents do not pay Uncle Sam any taxes on money earned within the Commonwealth of PR. Is
>that true for all territories, or just PR? What's the logic here? Why should they get a free ride.
The pay PR income tax instead, which leads to vast complexity since
>After doing a bit of googling, it seems that PR residents do not pay Uncle Sam any taxes on money earned within the Commonwealth of PR. Is
>that true for all territories, or just PR? What's the logic here? Why should they get a free ride.
the PR tax rules don't match the federal ones. I know the USVI has
similar rules, you pay tax to the USVI rather than to the feds.
>On a related note (but not a tax question), what's the net flow to/from Puerto Rico? Do more dollars flow from DC to PR, or vice versa.
poorest parts of the US, and the richest place in the Caribbean. Far
more money flows from the mainland to PR than the other way, which is
what you would expect given its low per capita income, about half that
of Mississippi, the poorest state.
If you're going to complain about financial flows, those of us in New
York, New Jersey, and California all of which are net donors, would
like have a few words with most states in the deep south and rural
west, all of which receive much more than they pay in. A fairly
reliable rule of thumb is that the louder the locals complain about
wanting to get Uncle Sam off their backs, the more Uncle Sam is giving
them.
MTW
Aug 20, 2016, 6:05:03 PM8/20/16
to
On Saturday, August 20, 2016 at 10:22:23 AM UTC-7, NadCixelsyd wrote:
> After doing a bit of googling, it seems that PR residents do not pay Uncle Sam
> any taxes on money earned within the Commonwealth of PR. Is that true for all
> territories, or just PR? What's the logic here? Why should they get a free
> ride.
The logic is "no taxation without representation." Since the territories do not have representatives in Congress, they don't pay US income taxes. They do, however, pay territorial income taxes. And they do pay US social security, medicare and self-employment taxes, and are entitled to the related benefits.
> After doing a bit of googling, it seems that PR residents do not pay Uncle Sam
> any taxes on money earned within the Commonwealth of PR. Is that true for all
> territories, or just PR? What's the logic here? Why should they get a free
> ride.
Just as the income tax systems of the 50 states don't necessarily "conform" to the Internal Revenue Code, the same is true of the territories. It can get tricky, to say the least.
scott s.
Aug 22, 2016, 7:24:20 PM8/22/16
to
MTW <mtwi...@yahoo.com> wrote in
news:50ef05d1-31b9-4988...@googlegroups.com:
> On Saturday, August 20, 2016 at 10:22:23 AM UTC-7, NadCixelsyd
> wrote:
>> After doing a bit of googling, it seems that PR residents do not
>> pay Uncle Sam any taxes on money earned within the Commonwealth of
>> PR. Is that true for all territories, or just PR? What's the
>> logic here? Why should they get a free ride.
>
> The logic is "no taxation without representation." Since the
> territories do not have representatives in Congress, they don't pay
> US income taxes. They do, however, pay territorial income taxes. And
> they do pay US social security, medicare and self-employment taxes,
> and are entitled to the related benefits.
>
> Just as the income tax systems of the 50 states don't necessarily
> "conform" to the Internal Revenue Code, the same is true of the
> territories. It can get tricky, to say the least.
>
Since a series of decisions known as the "Insular Cases", the concept of
"incorporated territory" was created, these being "territories"
defined by organic acts in the US Congress. Residents of incorporated
territories have in general all the rights/responsibilities of US
Citizens of the several states (and might include DC in this). The last
US Territory (T.H. was granted statehood status 8/21/1959.
"Unincorporated territory" residents have various citizenship as
determined by the relationship of the possession and the US. These
residents have generally been accorded status as "US Nationals"
lacking full status of Citizens. Currently only American Samoa
is under this regime, though residents of CNMI had option of retaining
US National status when law was changed in 1986. Then there's the
"minor outlaying islands" but these don't have any government per se
so there isn't any special status AFAIK (eg Midway, Line Islands, etc).
scott s.
..
news:50ef05d1-31b9-4988...@googlegroups.com:
> On Saturday, August 20, 2016 at 10:22:23 AM UTC-7, NadCixelsyd
> wrote:
>> After doing a bit of googling, it seems that PR residents do not
>> pay Uncle Sam any taxes on money earned within the Commonwealth of
>> PR. Is that true for all territories, or just PR? What's the
>> logic here? Why should they get a free ride.
>
> The logic is "no taxation without representation." Since the
> territories do not have representatives in Congress, they don't pay
> US income taxes. They do, however, pay territorial income taxes. And
> they do pay US social security, medicare and self-employment taxes,
> and are entitled to the related benefits.
>
> Just as the income tax systems of the 50 states don't necessarily
> "conform" to the Internal Revenue Code, the same is true of the
> territories. It can get tricky, to say the least.
>
"incorporated territory" was created, these being "territories"
defined by organic acts in the US Congress. Residents of incorporated
territories have in general all the rights/responsibilities of US
Citizens of the several states (and might include DC in this). The last
US Territory (T.H. was granted statehood status 8/21/1959.
"Unincorporated territory" residents have various citizenship as
determined by the relationship of the possession and the US. These
residents have generally been accorded status as "US Nationals"
lacking full status of Citizens. Currently only American Samoa
is under this regime, though residents of CNMI had option of retaining
US National status when law was changed in 1986. Then there's the
"minor outlaying islands" but these don't have any government per se
so there isn't any special status AFAIK (eg Midway, Line Islands, etc).
scott s.
..
Stuart Bronstein
Aug 23, 2016, 3:42:58 PM8/23/16
to
"scott s." <75270...@csi.xcom> wrote:
> Since a series of decisions known as the "Insular Cases", the
> concept of "incorporated territory" was created, these being
> "territories" defined by organic acts in the US Congress.
> Residents of incorporated territories have in general all the
> rights/responsibilities of US Citizens of the several states (and
> might include DC in this). The last US Territory (T.H. was
> granted statehood status 8/21/1959. "Unincorporated territory"
> residents have various citizenship as determined by the
> relationship of the possession and the US. These residents have
> generally been accorded status as "US Nationals" lacking full
> status of Citizens. Currently only American Samoa is under this
> regime, though residents of CNMI had option of retaining US
> National status when law was changed in 1986. Then there's the
> "minor outlaying islands" but these don't have any government per
> se so there isn't any special status AFAIK (eg Midway, Line
> Islands, etc).
What about Puerto Rico?
> Since a series of decisions known as the "Insular Cases", the
> concept of "incorporated territory" was created, these being
> "territories" defined by organic acts in the US Congress.
> Residents of incorporated territories have in general all the
> rights/responsibilities of US Citizens of the several states (and
> might include DC in this). The last US Territory (T.H. was
> granted statehood status 8/21/1959. "Unincorporated territory"
> residents have various citizenship as determined by the
> relationship of the possession and the US. These residents have
> generally been accorded status as "US Nationals" lacking full
> status of Citizens. Currently only American Samoa is under this
> regime, though residents of CNMI had option of retaining US
> National status when law was changed in 1986. Then there's the
> "minor outlaying islands" but these don't have any government per
> se so there isn't any special status AFAIK (eg Midway, Line
> Islands, etc).
--
Stu
http://DownToEarthLawyer.com
https://www.etsy.com/shop/studiobethdesigns
John Levine
Aug 23, 2016, 4:03:08 PM8/23/16
to
>> Residents of incorporated territories have in general all the
>> rights/responsibilities of US Citizens of the several states ...
>What about Puerto Rico?
The term Commonwealth doesn't mean anything. Puerto Rico and the CNMI
are incorporated territories for all meaningful purposes.
Similarly, Massachusetts, Pennsylvania, Virginia, and Kentucky are
states no matter what they call themselves.
R's,
John
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