17 October 2007

Economic Solutions -- Part 1

Here's My solution set--more to come--on fixing Puerto Rico's economic malaise:

Cut the sales tax from 7% to 3%: Despite a government intent on upping this to 8% or more (trust Me: The Fools want this badly) the current sales tax has proven itself to be too high, as anyone with an IQ above 60 could have foreseen. The proof: Overall consumer spending has dropped and the government coffers are receiving less money than expected. Dropping the sales tax to 3% jumpstarts the local economy and, as proven by hundreds of cases worldwide, will actually increase the government's revenue. In addition, cutting the tax will force a reappraisal of its application which at this point looks more like "Tax what you can get away with" instead of "Tax what can bear taxing." Any tax perceived as slipshod, unfair and wasteful--and this one hits all three with a vengeance--is not a tax that will propel an economy into even modest growth.

Tax all second and additional residential properties at modern property value: Local property taxes are an Edsel: An ugly relic of the 1950s. Although the number of second and third homes in Puerto Rico is not close to majority (the estimate is 18% of all homes and apartments are owned in addition to a primary residence), it does represent a substantial undertaxing of true value. By modernizing the property tax We can collect the monies needed to provide infrastructure services at today's costs, not at some 1950-level pipe dream. Property taxes for primary residences can remain at the current levels: The point here isn't so much raising money as it is making the housing market a fairer provider of its own services cost. Given that many of these houses and apartments are built upon or extend a ravished power and water/sewage jalopy, the need to raise monies in that specific segment has been avoided due to cowardice and political buffoonery.

Eliminate capital gains taxes on investments made in local companies: Businesses in Puerto Rico are often like fish in muddy puddles: Flopping about in murkiness while trying to survive on just barely enough oxygen. That business "oxygen"--investment capital--is so hard to find that entities as clueless about business as the EnterPRize cavemen can actually flourish. Those same cavemen would be laughed out of any stateside business community with their feeble brand of "entrepreneurial development." The culprit? Double or even triple taxation on local capital gains. While We bemoan the lack of investment capital, billions--yes, billions--of dollars flow out of Puerto Rico and within it through the so-called underground economy. The Fools taxed Us to "reveal" the underground economy, which is like kicking a dog to make it like you. Take a hint, Fools: The key to making the underground economy a cash-flow stream is to cut taxes.

I've just told you where to start.

The Jenius Has Spoken.

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