3 Myths about Puerto Rico’s Debt Crisis

NBC news created this video to clarify some of the myths about Puerto Rico’s debt crisis.

The first myth is that Puerto Rico can declare bankruptcy, as Detroit did. Detroit is a city — a municipality as defined in chapter 9 of the bankruptcy law — but Puerto Rico is a territory. The video above calls Puerto Rico “a commonwealth,” but that is actually not a political status. Puerto Rico is a commonwealth in the same way that Kentucky is a commonwealth: the word is part of its name.

A State or territory cannot declare bankruptcy, and Puerto Rico is excluded from the part of chapter 9 that would let it allow its municipalities to declare bankruptcy.

The second myth the video addresses is the idea that Puerto Rico doesn’t pay its fair share of taxes. In fact, Puerto Ricans pay Social Security and other payroll taxes as well as local taxes. What’s more, more than 40% of U.S. citizens in the States pay no federal income taxes, usually because their incomes are too low for them to owe taxes. In fact, Puerto Rico paid more in federal taxes than six States in 2011.

Puerto Rico has also been sending its men and women to serve in the U.S. military for more than a century. Puerto Rico contributes to the United States, just as the States do.

The final myth that NBC looked at was the idea that Puerto Rico could solve their financial problems by becoming an independent country. That is an option under the U.S. Constitution, but as the video points out, there is no structure in place for Puerto Rico to build an independent nation, and the people of Puerto Rico do not want to leave the United States.

Ignorance about Puerto Rico is part of the problem. Share the facts about Puerto Rico.

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