John Oliver has already contributed towards the education of Americans in understanding basic facts about their fellow U.S. citizens in Puerto Rico, including their lack of voting rights. In a segment last night, which included a heart-felt plea by Hamilton creator and star Lin-Manuel Miranda for Congress to help Puerto Rico, Oliver asked, “So how did we get to the point where members of Congress are being offered Broadway tickets to save Puerto Rico?”
“Because it’s a territory,” Oliver explained, “many laws that apply to the states have loopholes concerning Puerto Rico.” Oliver went on to note a number of “quirks” that have had “massive consequences” and helped lead to the current dismal financial situation:
- Section 936, which provided unsustainable tax breaks that helped create a booming manufacturing sector before being phased out,
- Triple tax exemptions (from federal, state and local taxes) on Puerto Rico’s municipal bonds that encouraged excessive borrowing,
- The provision in the Puerto Rico constitution putting debt service ahead of basic government human services
- The mysterious end of chapter 9 bankruptcy protection for Puerto Rico in 1984
“At this point, with massive debt… and no access to bankruptcy,” Oliver concluded, Puerto Rico is in a difficult situation.
Oliver went on to discuss an ill-advised and ineffective local law intended to woo billionaires to Puerto Rico to create jobs but has not helped the economy and has enabled the individuals to avoid capital gain taxes. Oliver showed portions of an advertisement to convince people to move to Puerto Rico based on this law, which relies on, in Oliver’s words, a condescending “colonial tone.” Oliver also cited concerns with the spread of the Zika virus, and vulture funds who currently own some 30% of the bonds in question.
Oliver noted that legislation is pending before Congress to address Puerto Rico’s problems but bill opponents are running an anonymous and deceptive advertising campaign to kill the proposal.
“We need to stop treating Puerto Rico like it’s just a tax haven,” said Oliver, “and instead we have to start treating it like an island of American citizens whose fate is interwoven with ours.”
Hamilton star Lin-Manuel Miranda, a recent Pulitzer Prize winner, ended the segment, explaining that his family is from Puerto Rico and expressing his hope that the “Congress that got us in this situation” with “suicidal tax incentive declarations” and “a million misguided loopholes” can get Puerto Rico back on its feet.
Editor’s Note: One sentiment expressed by both John Oliver and Lin-Manuel Miranda was that discussions on Puerto Rico’s political status would have to wait until after the current fiscal challenge is resolved. At the same time, however, both cited Puerto Rico’s inaccessibility to Chapter 9 of the Bankruptcy Code and the many legal “loopholes concerning Puerto Rico” as causes of the ongoing problems. The patchwork application of federal law to Puerto Rico would not happen if Puerto Rico were a state.