(This topic is obviously worthy of book+ length treatment, but I’m intentionally time-boxing this to an hour. This is very much the perspective of someone from the US moving to Puerto Rico, not the perspective of a “native Puerto Rican”, presumably similar to most of my audience. I will probably do intermittent posts about Puerto Rico specific topics in the future.)
Puerto Rico is a US Territory (since 1898), and I’ve lived here since 2018. The history of relations between Puerto Rico and the US is complex — starting out with conquest, then a few decades of extreme racial discrimination (Insular Cases explicitly declared Puerto Ricans racially inferior…), and ultimately unlike Hawaii and Alaska and previous territories, there has been no statehood for the territory, despite having a population larger than 20 states. Puerto Rico’s culture is obviously distinct from the rest of the US in many ways, with Spanish as primary language, an economy largely developed through hundreds of years of various tax incentives and government policies rather than individual settlers and pioneers, and obviously the physical disconnectedness from the Continental United States (CONUS).
There have been periods of aggressive Puerto Rican nationalism (including murders of congresspeople, bombings, and other very violent acts), periods of intensive assimilation effort (banning teaching in Spanish, the Puerto Rican flag), and periods of seemingly-intentional neglect, leading to very different views of Puerto Rico and the US by different age cohorts — it’s easier to find a 60-80 year old Puerto Rican who speaks great English in some of the areas outside San Juan than a 30-50 year old.
Three major events have largely shaped today’s Puerto Rico:
IRS Section 936 ending (in 1995 — with a 10 year phaseout by end of 2005) — this essentially destroyed the main economic engine of Puerto Rico, pharmaceutical manufacturing and other IP-heavy value-add industrial production
Massive borrowing and bankruptcy (2004-2008), part of endemic corruption and mismanagement
Hurricane Maria — (Category 4 hurricane in 2017, the worst in recorded history here) combined with decades of underinvestment in infrastructure and maintenance
I moved to Puerto Rico in 2018. I’d visited a few times in 1998-2000 when living in the Caribbean, as it was an American Airlines hub with flights from Boston to San Juan to Anguilla. I wasn’t particularly interested in the Caribbean at the time — I was a Washington State resident and leaving due to WA state going woke (both tax laws and especially gun laws). I was intending to move to Las Vegas, but a friend from Y Combinator on Facebook mentioned Puerto Rico and suggested I take a look. Quickly researching the tax incentives under Act 20 and 22 (and the financial institution Act 273), adequate infrastructure and gun laws, and some pioneers who had moved here in 2012-2016, made it an easier decision for me. I attended a conference in early 2018, one of the first events after Hurricane Maria (with lots of damage still evident), drove around the island in a rental car with my lawyer (and fellow cypherpunk and friend, and who conveniently speaks some Spanish), and my decision was made. I met one of the top attorneys on the island, Giovanni Mendez, then of BDO and now of his own firm GEO, and started the process. Unfortunately I was a bit delayed in preparing all the paperwork, so I didn’t actually move here until the end of 2018.
Essentially, the tax incentives are such that if you live here (full time, real residence — IRS 570 outlines the requirements) and meet some other requirements ($0-10k annual charity donation, $300 or $5000/yr filing fee, and some other minor aspects for individual, until 2035; incentives for a business which exports services outside Puerto Rico — none of this is legal advice, I’m not a lawyer, please consult one for your specific situation, you get the best possible tax deal for a US citizen anywhere in the world. The United States (uniquely along with 2-3 other small countries) taxes citizens globally on worldwide income, with a relatively low (~$130k/yr) exclusion for earned income while overseas full-time. Puerto Rico and other territories, under IRS 933, get to run their own tax systems, so Puerto Rican income is taxed solely by Puerto Rico instead. Since Puerto Rico tax rates are in many brackets and ways higher than US federal tax rates, Puerto Rico is higher tax burden than living in a low-tax (and much lower cost of living) state like Florida or Texas, but the tax incentive acts change this dramatically. For individuals, the capital gains tax rate can be 0% (long term and short term), vs. combined rates up to 60% for a New York or California resident! Income tax rates for individuals are 33% over $61500, so higher than federal, but many people have substantial capital gains relative to wage income. Business income for export services is taxed at 4% (plus a bunch of other random taxes, many of which are rebated or reduced up to 100% for a period under the tax incentives).
There are lots of small to medium sized things to complain about as a newcomer to Puerto Rico, of >1% wealth and income, and as a beneficiary of the tax incentives. These are largely outweighed by the huge advantages of living here — obviously the tax incentives are major factors, but the entrepreneurial culture, natural environment, and for me, long-term cultural direction of the place (starting from a bad place post bankruptcy, but improving, unlike most of the rest of the US, which is going from greatness to worse). Most of the worst things about Puerto Rico can be solved with money — public infrastructure of almost every kind of falling apart, but you can use private alternatives. Others can be addressed by hiring intermediaries — there’s a system of “expeditor” or “gestor” who will through various licit or illicit means cause transactions which would otherwise be very slow (such as turning on electricity at a new building, or renewing a driver’s license) happen more quickly. A lot of other things can be improved by learning Spanish (I’m maybe A2/B1 level? although more so for Venezuelan/Colombian Spanish and written Spanish than spoken Puerto Rican Spanish). Some, like road quality and traffic in San Juan can just be accepted (although my old land cruiser on big tires helps with both, at the cost of 10mpg). I often complain about things in Puerto Rico, but I could easily resolve most of them by building my own house vs. renting an apartment, living outside San Juan, and spending more on services/products, so it’s mostly my own fault.
There are lots of huge things to complain about as a median Puerto Rican/someone born here and of “normal” means (sufficient to make migrating to the US, as 6 million Puerto Ricans have done, compared to 3 million remaining in Puerto Rico, extremely understandable and reasonable.) Many of these things are due to “the Government”, either Puerto Rico or United States, as well as treatment by businesses both here and in the rest of the world. I hope at least some of these can be fixed, mostly through technology and education. I’m honestly not terribly optimistic about the long-term rate of improvement of Puerto Rico, as it’s so easy for the best and brightest to move to Florida and New York, and jobs here are so limited (especially outside the public sector), so it’s hard to convince anyone to stay, and there’s a fear the “demographic death spiral” point has already happened. There are some really weird things about Puerto Rico’s current situation, too — University of Puerto Rico - Mayaguez is one of the top agronomy and engineering schools in the US, and has a tuition of thousands of dollars per year, vs. $30-60k/yr for most comparable schools — yet there’s nowhere near the level of entrepreneurship a school that good would catalyze elsewhere.
The “Status question” of Puerto Rican statehood (vs. independence, vs. other status such as today’s commonwealth status) seems to be the primary political issue debated here, and has been undecided for a long time. I don’t have any strong opinions on it personally. I can see the issue in a somewhat more abstract way (I would almost certainly leave if the status changed substantially, but it’s unlikely to change within the 2035 expiration period of the tax acts), but it also seems to me that the near exclusive focus on this issue prevents any improvement on other more achievable changes (reducing corruption, improving infrastructure, improving the economy).
The process of moving to Puerto Rico is pretty simple. As it’s a part of the United States, you just book a flight, find a place to live, and do some basic administrative paperwork (transfer your driving license to here, register to vote locally, maybe get a local bank account, etc.). The process to apply for and qualify for the tax incentives is much more involved, and you should probably contact an attorney (such as Giovanni Mendez) — it’s essentially 100-200 pages of paperwork, can be done in a couple weeks, for individual without much complexity, and similar to set up a new business; much more involved to transfer an existing operating business, or presumably for an individual with substantial US assets which need to be disposed of or otherwise dealt with.
I personally recommend the greater San Juan metro area for most people moving from the US — services, proximity to the airport, degree of English spoken, etc. are all far higher than elsewhere. Particular neighborhoods worth looking into are Viejo San Juan (oldest city in the Americas; seems like the old city in Lisbon); Condado (a Puerto Rican version of Miami Beach), Ocean Park and Isla Verde (also beachfront, more sedate/residential) — and a bit farther out, Dorado (kind of Beverly Hills on the water), Guaynabo (Beverly Hills in the…hills). Some cities a short drive away are Luquillo, Rio Grande, Vega Alta. About an hour away is Palmas Del Mar (Microsoft Puerto Rico), two hours away is Rincon (Pacifica/surfer town, lots of gringo hippies which I find intolerable), Cabo Rojo, and the neighboring islands of Vieques and Culebra (beautiful but logistically challenging and very underserved by services.). You can get a cheap apartment not on the beach for $500/mo 1BR/1BA, or a $25-50mm palace on the waterfront; prices for real estate tend to be maybe Florida Gulf Coast equivalent, if a lot cheaper as soon as you move away from the beach/”nice” areas. I know a lot of people spending $5-15k/mo in rent; I pay less than their HOA dues in rent and it’s fine, although not luxurious at all. I’ll probably eventually move but honestly all I care about in a place to live is air conditioning, a nice spot for my desk, and high-speed Internet — I’ll probably live on a sailboat for a few years someday, and maybe eventually Mars, so my standards are different.
Puerto Rico has 4 Costcos, lots of CVS/Walgreens, Walmart, and other big-name stores (and more fast food restaurants per capita than most parts of the US). In general quality is pretty low in most stores relative to top-tier markets in the US, and prices are maybe 10-20% higher than Manhattan (!!!), due to taxes, inefficiency, and logistics. Amazon delivers most products here in 3-5 days (exception being anything prohibited from commercial aircraft cargo, like lithium primary cells and chemicals/pressurized containers). There are ~50 flights a day from SJU to the US, and flights to Caribbean/Latin America, Madrid, and sometimes to Germany and Canada — biggest problem is no non-stop flights to anywhere in the US west of Texas, and it’s almost always cheaper for international flights to fly to New York or Miami or Atlanta and purchase another ticket separately. Importing cars is a pain (due to a 40% tax on cars >$40k), although plug-in hybrid and battery electric vehicles are exempted — I’m planning to get a Tesla Cybertruck in a year or two, but happy with my $13k 2006 GX470 until then. Electricity is about $0.25/KWh, much higher than most of the US, and getting more expensive, plus unreliable; most HNW people have generators at their homes or live in buildings with generators, plus use solar and batteries to reduce costs. Weather is consistently 70-85F, with periodic rain, on the coast — maybe gets to 50-70F at altitude in the central mountains, and hurricane season is primarily August through October.
Lots of other stuff can be a concern for people moving here (public schools suck on every dimension, so private schools or homeschooling; pervasive poverty everywhere and general decay of buildings; some tension between some local people here and immigrants; etc.), but nothing particularly a roadblock if the benefits are high enough for you. The social scene here is interesting — I tend to just go to crypto-specific events and socialize with older/married professionals, avoid the club and party scene entirely, and have never really considered dating here; I think it’s a wild party scene for “the youth” and much more sedate for everyone else, maybe like Miami. My biggest ongoing complaint is lack of great Asian food, since I’m used to Asia, NYC, and the West Coast, but even Miami lacks that, and I’ve learned to cook pretty well.
There are some facebook (lol) groups which are probably the best sources of information about moving to Puerto Rico: I run PR Expats (general topics, not specific to tax acts) and Act 60 Homes (real estate), and the best group for tax policy and tax acts is Act 20/22/60 Tax
Overall, I’m a big fan of Puerto Rico as an option — if you’re not deeply tied to a specific place elsewhere, and are a US citizen with substantial capital gains or exported professional services liability, it’s probably worth investigating. It’s not worth moving solely for the tax benefits, but if you like living in a place like this (or are equally happy living anywhere), the tax benefits and concentrated entrepreneurial culture can be a major incentive. I’m happy with my decision to move here, and especially happy with the community here, and would love to have more smart, ambitious people as new neighbors.