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Puerto Rico’s tax breaks for wealthy newcomers may cost the U.S. hundreds of millions yearly, with weak IRS oversight raising concerns.
A new U.S. Government Accountability Office report examines Puerto Rico’s tax incentives, which have drawn thousands of wealthy Americans since 2012 through programs like Act 22 and Act 20, offering tax exemptions on income and capital gains.
The report, requested by House Democrats, finds these breaks may cost the federal government hundreds of millions annually and raises concerns about IRS oversight due to staffing shortages, data gaps, and slow audit progress.
The IRS lacks full access to Social Security data for claimants and has not acted on referrals of potential non-compliant individuals.
While Puerto Rico claims the programs generated over $2.5 billion in investment and tens of thousands of jobs, critics argue they exacerbate wealth inequality and reduce federal revenue for key programs.
The IRS has acknowledged the findings and is working with Puerto Rico to improve data sharing.
Las exenciones fiscales de Puerto Rico para los recién llegados ricos pueden costar a los EE.UU. cientos de millones de dólares al año, con una supervisión débil del IRS que plantea preocupaciones.