Paul L. Caron

Friday, August 5, 2016

Oei Reviews Dick's U.S. Tax Imperialism In Puerto Rico

Jotwell (2016)Shu-Yi Oei (Tulane), U.S. Tax Policy and Puerto Rico's Fiscal History, JOTWELL (2016) (reviewing Diane Lourdes Dick (Seattle), U.S. Tax Imperialism in Puerto Rico, 65 Am. U. L. Rev. ___ (2016):

U.S. Tax Imperialism in Puerto Rico is a careful, interesting, and timely account of how the U.S. has designed tax policies with respect to Puerto Rico since 1898, but its contribution does not end there. The article also raises broader questions.

For example, one wonders whether similar dynamics have been in play with respect to the other U.S. territories. Another important question concerns Puerto Rico’s relatively unnoticed place in the history of capital flight from the United States. According to Professor Dick’s account, capital flew from the U.S. to Puerto Rico as a result of tax incentives. But then it fled further and more permanently abroad due to the increasing use of controlled foreign corporations by U.S. corporations. The growth in controlled foreign corporations occurred in response to the repeal of the possessions tax credit and the broader shift in U.S. tax policy in Puerto Rico after 1975. This account potentially muddies the usual story about capital lockout and capital flight: it suggests that contrary to the usual narrative, offshoring of U.S. capital cannot be entirely attributed to direct comparisons between the U.S. and other sovereign competitors. Rather, at least some capital may have moved from the U.S. to U.S. possessions such as Puerto Rico, and then to more distant shores as a result of U.S. tax policy with respect to thepossessions. This is a topic that merits further investigation.

Scholarship, Tax | Permalink