The zero tax plan
 

Puerto Rican schools, government offices close

http://www.cnn.com/2006/WORLD/americas/05/01/puerto.rico.shutdown.ap/index.html

The closure gave an unplanned holiday to 500,000 students and threw almost 100,000 government employees -- including 40,000 teachers -- temporarily out of work.

Puerto Rico has run out of money to fund schools and government jobs partly due to (surprise surpise) they don't have any sales tax.

Surely this is a government that one could drown in a bathtub, no? Ofcourse this probably has something to do with it:

The government is Puerto Rico's largest employer, with some 200,000 workers. Salaries make up about 80 percent of the government's operational costs.

This reminds of my beloved Michigan when Engler was tossed out. Granholm had to raise everyones taxes because the state was so friggin' bankrupt it couldn't repair the hundreds of miles of pot-holed roads Engler refused to fix, much less fund the schools or anything else. G'dam Democrats, always raising taxes to pay for... roads.

The states should do like the Federales and just borrow while cutting taxes.

Mat, don't forget that there are no sales taxes (yet anyway) but there is an excise tax of 6.6% on everything that enters the island (in addition to the Federal excise tax of items that come into the USA).

I don't condone what's going on in there but its a boatload of political showboating. They been debting this issue for some time now.

Its a disgrace.....

An additional bit of info, the governemet was always the largest employer but, since the elimination of IRS sec. 936 (which granted tax free or heavy tax relief for US based business to establish there) to push the NAFTA, most US companies jumped shipped and the governor back then employed most/all that were laid off as part of his political campaign (I guess).

Now you have a bloated government which got, well, more bloated....

I don't think you pay PR or Federal income tax there either. Sweet deal huh? PR is a true ward of the state, so to speak.

You do pay PR state taxes which are based on US Tax law. Deductions (and policing them) is not as tough as what it is here though.