The islands of Puerto Rico are territories of the United States of America. Because of this, all of it’s 3.548 million citizens are also US citizens and are entitled to the same rights we are, and the same laws should be applicable. However, Puerto Rico is $70 billion and counting in debt and is unable to reach out for help.

According to a CNN article entitled “Puerto Ricans Leaving Island for U.S. in Record Numbers,” Puerto Rico has been in recession for 10 years now and as the economy declines, many people cannot find jobs, causing them to go into poverty or flee to the mainland for more jobs, better education, better pay, and better living conditions. In fact, about 230 Puerto Ricans leave the commonwealth every day, which is the largest exodus on record.

According to a plethora of sources compiled in an episode of Last Week Tonight with John Oliver about Puerto Rico’s debt crisis, the debt is unpayable causing the territory to have a poverty rate of 45% which, when the math is done, becomes 1.5966 million citizens living in poverty. To combat this poverty rate, the government has hiked sales tax up to 11.5% as opposed to the 4% sales tax in New York State. Because of the large amount of people living in poverty and the 230 people leaving daily, the sales tax hasn’t really done much to help Puerto Rico. If anything, the new tax hurts the commonwealth, as the increased tax makes necessary items more expensive and unattainable to those in the lower classes.

How did Puerto Rico get like this? Who let it happen? The answer lies in the lawmakers of the US and Puerto Rico. According to Congress, “Puerto Rico is foreign to the US in a Domestic Sense” which allowed them to create legal loopholes, making Puerto Rico a tax free haven. For example, Section 936 allowed tax breaks to move business to Puerto Rico. Puerto Rico became a medicinal and pharmaceutical paradise, and later when the tax breaks were cut to offset taxes on the mainland, 50% of manufacturing jobs were lost, plunging people into debt and poverty.

To combat the loss of jobs, the Puerto Rican government issued municipal bonds. To make these bonds attractive in the market, the bonds were triple tax exempt (federal, state, and local). Once Wall Street found out that you could purchase these bonds and not have Puerto Rico in the name, they became even more valuable, being able to be sold more diversely. The Puerto Rican lawmakers said that certain bondholders would be paid in full before anyone else, including but not limited to: public works, sanitation, law enforcement, and education. Officials from the Puerto Rican government have said that creating and selling the bonds was so easy, that they just got hooked and couldn't stop.

Puerto Rico in its full poverty should declare bankruptcy. However, according to a law pushed by Strom Thurmond in 1984, Puerto Rico cannot declare chapter 9 bankruptcy. Even better, no one knows why it was put in the law in the first place. The library that contains all of Mr. Thurmond's work was asked to look through their files and according to the staff, there is no apparent reason why that was put into the law. So, without being able to get the relief of Chapter 9, Puerto Rico stays in debt and plunges itself further into its eventual grave.

Four years ago, a law was passed to lure businesses to the commonwealth. The law made businesses exempt from capital gains taxes. This was part of a plan by the Puerto Rican government to create 50,000 jobs to help its citizens, but in reality it only created 5,832 which is 12% of the overall jobs it was planned to create. The tax breaks led to $420 million of debt, which hurts places like hospitals where the power is being shut off from low funds and about one doctor leaves Puerto Rico every day; causing turmoil in the medical system. Along with the outbreak of the Zika virus affecting 1 in every 5 citizens, the medical system of Puerto Rico is looking at serious problems.

In most cases, places in this situation would reach out to their fund holders; however, the majority of fundholders are hedge or ¨vulture¨ funds who buy cheap bonds in chaotic situations like these and sell them for a quick buck. Congress is giving Puerto Rico a bipartisan bill which allows it to negotiate with its creditors, but success is not guaranteed. Lastly, the Investment Act of 1940 which sets boundaries on open-ended mutual funds does not apply in Puerto Rico.

After reading this, hopefully you can see that due to neglect and careless law making, Puerto Rico is plunging into a deep dark hole with no sign of returning without help. Puerto Rico is asking for relief from its debt-ridden state, not a bailout. Many believe that the islands want a bailout without ever trying to help itself. As you have read, there is no way Puerto Rico is able to help itself and ever get back to the prosperous economy that it once had with tax breaks for businesses to lure them in.