Asset Protection Strategies, STAFF NEWS & ANALYSIS
Puerto Rico – A Tax Haven Uncle Sam Tolerates?
By Staff News & Analysis - May 27, 2014

It's been sunny almost every day with a cool ocean breeze, and temperatures in the 70s and 80s. Sure beats the freezing cold and snowy weather we came from in Vermont. Our big workout down here is taking a swim in the pool or the ocean versus digging out of huge snow piles back in New England. But it wasn't just the sunny skies, year-round warm weather, and beautiful ocean beaches that drew us to Puerto Rico; it was the incredible tax breaks that are available here that are not available anywhere else in the world for would-be former US residents. – International Man

Dominant Social Theme: Puerto Rico … issuing the kind of tax breaks that Uncle Sam can tolerate.

Free-Market Analysis: Puerto Rico is hot – not weather-wise but as a business destination. And perhaps there's a reason. Uncle Sam is well aware that many are doing their best to move their money and themselves out of the US; But if the funds have to go anywhere, US bureaucrats presumably would rather have them go to a protectorate like Puerto Rico than a country more emphatically outside of US influence.

The difference in emphasis can be seen in the way the US is treating St. Kitts-Nevis versus Puerto Rico. As was just recently reported, the US Financial Crimes Enforcement Network's (FinCEN) has released new guidance "warning US banks against working with individuals holding passports from St. Kitts-Nevis."

Now, it's true that St. Kitts' attraction is somewhat different than Puerto Rico's in that St. Kitts offers what is called "citizenship-by-investment." But nonetheless, some of the reasons end up being the same. People who want a second passport often also want to do business outside of the US mainland as part of an effort to escape the growing threat of US worldwide taxation.

It would seem Uncle Sam is willing to tolerate Puerto Rico's attempts to make itself over as a kind of tax haven because it still resides within the sphere of US influence. So maybe – just maybe – Puerto Rico is a top alternative right now for people who have tax minimization as their main priority.

If so, that may be because of two relatively recent laws … Act 20 and Act 22. The laws are basically aimed at wealthy people and tempts businesses to relocate by offering a flat 4% on earnings and a 100% tax exemption on dividends or distributions from export services.

MarketWatch recently covered the explosion of interest in Puerto Rico. Here's an excerpt:

John Paulson is expected to expand his investment in Puerto Rico to $1 billion by the end of next year, as the hedge fund titan leads a growing brigade of wealthy U.S. business owners who are taking advantage of the languishing island's efforts to transform itself into a tax haven.

The Paulson & Co. founder, estimated to be worth $11 billion, is headlining an invitation-only summit in San Juan, Puerto Rico, on Thursday to discuss two new tax laws that provide generous dividend and capital gains tax breaks for individuals willing to relocate their businesses to the tropical island, according to Puerto Rico officials.

For their part, the commonwealth's political leaders are hoping the tax-breaks will attract businesses that can help jump-start Puerto Rico's ailing economy, which is suffering from high unemployment rates and a declining population.

The tiny island is grappling with a debt burden of roughly $70 billion, and many municipal credit analysts see a broader economic revival in Puerto Rico as key to making good on that debt. Paulson has already invested $260 million this year to create two high-end luxury resorts in San Juan's Condado district. That follows investments last year in the St. Regis Bahia Beach Resort and the Bahia Beach Resort & Gold Club.

The government expects Paulson to invest a total of $1 billion in Puerto Rico by 2015. Paulson's firm had no comment. "Get on a plane now, and business class is filled with representatives from Blackstone, Goldman, DE Shaw, and every private equity firm I know," said Nicholas Prouty, president of Putnam Bridge on the new interest in Puerto Rico from Wall Street's elite.

Putnam Bridge Investments is expected to invest $200 million in Puerto Rico this year, according to the government. A LOW-COST BASE "What we are trying to achieve here is a second transformation with the Puerto Rico economy," said Alberto Baco, the Puerto Rican secretary of economic development and commerce.

More than 150 companies are already looking to move their offices to Puerto Rico to take advantage of the new tax laws, and the government is expecting more than 300 applicants this year. Officials are expecting the move to create 90,000 jobs by 2016 and to add up to $7 billion to the island's GDP.

"The cost of doing business is low, the cost of hiring local labor is lower," said Peter Schiff, owner of Euro Pacific Asset Management ."And if I need to move employees form the mainland it's easier, I don't have to worry about visa issues." Schiff recently relocated his firm from California to Puerto Rico and is establishing his main office in the capital, San Juan.

Alex Daley of Casey Research has also moved to Puerto Rico because of the tax advantages that he described in a Casey report entitled, "Puerto Rico's New Tax Advantages"


Here's an excerpt:

According to Bloomberg, "The marginal tax rate for affluent New Yorkers can exceed 50 percent on ordinary income." By relocating to Puerto Rico, enormous tax savings can be achieved. For certain investors, that could mean eliminating taxation completely. For the right businesses, it could mean tax rates of just 4% on earnings. Anyone who relocates to Puerto Rico can apply for the tax shelter of Acts 22 and 20—including mainland US citizens, who cannot find similar benefits anywhere else in the world without significant complication and expense.

Now, I know it sounds too good to be true. But I've done a comprehensive boots-on-the-ground investigation and found that the tax advantages are real, and that for many Americans they are a huge opportunity that could truly be life-changing.

Because, until now, there was no easy, legal way to escape US taxes… besides death or renouncing your US citizenship. That's because the US is the only country in the world that effectively taxes its citizens and former residents no matter where they live and make their money.

Sure, there are plenty of low-tax countries in the world. Singapore, the Cayman Islands, and Dubai come to mind—and chances are you've heard of them all for that reason. These little countries have turned into financial and services meccas because any Londoner or Parisian or Canadian could head there and run a business or manage their investments in a much more tax-friendly climate. America, not so much.

While they do allow a small exemption for a minimal amount of income, with lots of rules, generally Americans are taxed no matter where they go. Especially the successful ones. Many believe it's these suffocating and unfavorable tax policies plaguing US citizens that are responsible for the record number of Americans saying goodbye permanently to Uncle Sam by renouncing their citizenship and heading to places like Singapore.

In fact, Forbes is reporting that the number of US citizens and permanent residents who gave up their citizenship soared 221% last year alone. That's what Facebook cofounder Eduardo Savarin did when he headed for Singapore. But the penalty for giving up your citizenship is high if you're wealthy—thanks to the enormous US exit tax. The US worries about this trend, of course.

Jurisdictions like Puerto Rico want in on it to boost their own economies, like Hong Kong or Macau or Belize have. Because of those dual forces, there is now a much easier way to seek less-taxed shores, one of which is rooted in decades of US law and support and unlikely to change on a whim. That's where Puerto Rico shines brightly above all others… By becoming a bona fide resident of Puerto Rico, you can escape paying high US taxes legally, still retain your American citizenship, and avoid paying the hefty exit tax.

Casey offers a downloadable PDF guidebook, "Puerto Rico's Stunning New Tax Advantages," to further explain the Puerto Rico program.

There are downsides to the Puerto Rican opportunity, as there are to almost everything in life. The tax breaks have made Senators like Harry Reid and other Democrats grumpy. According to reports, John Buckley, a former tax counsel for the Democratic Party on the United States House Committee on Ways and Means, believes that Puerto Rico is on its way to becoming a bona fide tax haven.

And yet … The chances are that nothing drastic is going to be done to affect Puerto Rican benefits. For Democrats, the prospect of interfering with the island's attempts to achieve fiscal solvency is probably a lose-lose proposition. As a practical matter, they probably wouldn't be able to stop the protectorate from continuing to offer tax breaks. Then there's the ill will that would be generated by such an attempt within the Hispanic community: It would probably have a significant, negative impact on the Democrats' political base.

There's a third, even more sensitive reason, however, and that's the probable cooperation between Puerto Rican banking and US authorities. Given upcoming efforts by the US to leverage tax information on citizens around the world, there's probably no doubt that the IRS and others would rather have big business relocating to Puerto Rico than, say … Singapore.

After Thoughts

For all these reasons, Puerto Rico is likely to continue to offer tempting tax breaks without much political interference. And as we mentioned at the beginning of the article, that will likely make it "the tax haven that Uncle Sam tolerates" – at least for the foreseeable future.

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Posted in Asset Protection Strategies, STAFF NEWS & ANALYSIS
  • Jim

    You may want to read the 1901 Supreme Court Case “Downes v. Bidwell 182 U.S. 244 and especially the dissenting opinion where he stated in part;

    “These are words of weighty import. They involve consequences of the most
    momentous character. I take leave to say that if the principles thus announced
    should ever receive the sanction of a majority of this court, a radical and
    mischievous change in our system of government will be the result. We will, in
    that event, pass from the era of constitutional liberty guarded and protected
    by a written constitution into an era of legislative absolutism.”

    The idea prevails with some-indeed, it found expression in agruments at the
    bar-that we have in this country substantially or practically two national
    governments; one to be maintained under the Constitution, with all its
    restrictions; the other to be maintained by Congress outside and independently
    of that instrument, by exercising such powers as other nations of the earth are
    accustomed to exercise. It is one thing to give such a latitudinarian
    construction to the Constitution as will bring the exercise of power by
    Congress, upon a particular occasion or upon a particular subject, within its
    provisions. It is quite a different thing to say that Congress may, if it so
    elects, proceed outside of the Constitution. The glory of our American system [182 U.S. 244, 381]
    of government is that it was created by a written constitution which
    protects the people against the exercise of arbitrary, unlimited power, and the
    limits of which instrument may not be passed by the government it created, or
    by any branch of it, or even by the people who ordained it, except by amendment
    or change of its provisions. ‘To what purpose,’ Chief Justice Marshall said in
    Marbury v. Madison, 1 Cranch, 137, 176, 2 L. ed. 60, 73, ‘are powers limited,
    and to what purpose is that limitation committed to writting, if these limits
    may, at any time, be passed by those intended to be restrained? The distinction
    between a government with limited and unlimited powers is abolished if those
    limits do not confine the persons on whom they are imposed, and if acts
    prohibited and acts allowed are of equal obligation.’

    “The wise men who framed the Constitution, and the patriotic people who
    adopted it, were unwilling to depend for their safety upon what, in the opinion
    referred to, is described as ‘certain principles of natural justice inherent in
    Anglo-Saxon character, which need no expression in constitutions or statutes to
    give them effect or to secure dependencies against legislation manifestly
    hostile to their real interests.’ They proceeded upon the theory-the wisdom of
    which experience has vindicated- that the only safe guaranty against
    governmental oppression was to withhold or restrict the power to oppress. They
    well remembered that Anglo- Saxons across the ocean had attempted, in defiance
    of law and justice, to trample upon the rights of Anglo-Saxons on this
    continent, and had sought, by military force, to establish a government that
    could at will destroy the privileges that inhere in liberty. They believed that
    the establishment here of a government that could administer public affairs
    according to its will, unrestrained by any fundamental law and without regard
    to the inherent rights of freemen, would be ruinous to the liberties of the
    people by exposing them to the oppressions of arbitrary power. Hence, the
    Constitution enumerates the powers which Congress and the other departments may
    exercise,-leaving unimpaired, to the states or the People, the powers not
    delegated to the national government nor prohibited to the states. That
    instrument so expressly declares in [182 U.S. 244,
    382] the 10th Article of Amendment.
    It will be an evil day for American liberty if the theory of a government
    outside of the supreme law of the land finds lodgment in our constitutional
    jurisprudence. No higher duty rests upon this court than to exert its full
    authority to prevent all violation of the principles of the Constitution.”

    Also see Title 4 USC § 72.
    All offices attached to the seat of government shall be exercised in the District of Columbia, and not elsewhere, except as otherwise expressly provided by law.

    • Bill Ross

      hmm… some “goddamn piece of paper”. It and all of the REAL words and concepts have been rationalized away for subjective “greater good”.

      Perhaps, the time of “words” in the context of self-decreed “experts” who assume / decree “meaning” is past?

      After all, “we know them by what they DO”

      • Jim

        Well Bill, I see by the response time, 4 1/2 hours, that you did not take the time to pull the Downes v. Bidwell case and study it before you made such an intellegent informed response.

        Government cannot do anything without authority to do so. They create scenerion which gives them a plausable out. Presumption in law is devistating to us unless you understand that the presumption can be rebutted.

        I am sure you are aware of the following.

        Congress wears two hats.

        It is quite clear,
        then, that there is a citizenship of the United States and a citizenship of
        a State which are distinct from each other and which depend upon different
        characteristics or circumstances in the individual. [Slaughter House
        Cases, 83 U.S. 36, 16 Wall. 36][21 L.Ed. 394 (1873), emphasis added]

        That there is a citizenship of the United States and a citizenship of
        a state, and the privileges and immunities of one are not the same as the
        other is well established by the decisions of the courts of this
        country. The leading cases upon the subjects are those decided by the
        Supreme Court of the United States and reported in 16 Wall. 36, 21 L. Ed. 394,
        and known as the Slaughter House Cases. [K. Tashiro v. Jordan, 256 P.
        545, 549 (1927)][affirmed 278 U.S. 123 (1928), emphasis added]

        A citizen of any one of the States of
        the union, is held to be, and called a citizen of the United States,
        although technically and abstractly there is no such thing.
        To conceive a citizen of the United States who is not a citizen of some one of
        the States, is totally foreign to the idea, and inconsistent with the proper
        construction and common understanding of the expression as used in the
        Constitution, which must be deduced from its various other provisions. The
        object then to be attained, by the exercise of the power of naturalization, was
        to make citizens of the respective States. [Ex Parte Knowles, 5 Cal. 300 (1855)]
        [emphasis added]

        A person who is a citizen of the United
        States is necessarily a citizen of the particular state in which he resides.
        But a person may be a citizen of a particular state and not a citizen of
        the United States. To hold otherwise would be to deny to the state
        the highest exercise of its sovereignty, — the right to declare who are its
        citizens. [State v. Fowler,
        41 La. Ann. 380, 6 S. 602 (1889)]

        I have no doubt that those born in
        the Territories, or in the District of Columbia, are so far citizens as to
        entitle them to the protection guaranteed to citizens of the United States in
        the Constitution, and to the shield of nationality abroad; but it is
        evident that they have not the political rights which are vested in citizens
        of the States. They are not constituents of any community in which is
        vested any sovereign power of government. Their position partakes
        more of the character of subjects than of citizens. They are
        subject to the laws of the United States, but have no voice in its
        management. If they are allowed to make laws, the validity of these laws
        is derived from the sanction of a Government in which they are not
        represented. Mere citizenship they may have, but the political rights
        of citizens they cannot enjoy until they are organized into a State, and
        admitted into the Union. [People v. De La Guerra, 40 Cal. 311, 342

        There is in our political system a government of each
        of the several states and a government of the United States. Each is
        distinct from the other and has citizens of its own, who owe it allegiance
        and whose rights within its jurisdiction it must protect. The same person may
        be at the same time a citizen of the United States; but his rights of
        citizenship under one of these governments will be different from those he has
        under the other. The government of the United States, although it is within the
        scope of its powers, supreme and beyond the states, can neither grant or secure
        its citizens rights or privileges which are not expressly or by implication
        placed under its jurisdiction. All that cannot be so granted or secured are left to the exclusive protection of the
        states. [U.S. v. Cruikshank, 92 U.
        S. 542, 23 L. Ed. 588.]

        “The laws of Congress in respect to those matters do
        not extend into the territorial limits of the states, but have force only
        in the District of Columbia, and other places that are within the exclusive
        jurisdiction of the national government.” [Caha v. United States 152 U.S.
        211 (1894)]

        “Legislation of Congress, unless a contrary intent
        appears, is meant to apply only within territorial jurisdiction of the
        United States.”

        Foley Bros. v. Filardo, 336 U.S. 281; 69 S.Ct. 575

        Title 4
        USC, Section 72 “All offices
        attached to the seat of government shall be exercised in the District of
        Columbia, and not elsewhere, except as
        otherwise expressly provided by law.”

        ; See also Article I, Section 8,
        Clause 17– and — Article IV, Section 3, cl. 2.

        Jones v. Temmer (Aug. 11, 1993) U.S. District
        Court, Denver Colorado.

        “The privileges and immunities clause of the
        Fourteenth Amendment protects very few rights because it neither incorporates
        any of the Bill of Rights nor protects all rights of individual citizens.
        See Slaughter-House Cases, 83 U.S. (16 Wall.) 36, 21 L.Ed. 394 (1873). Instead,
        this provision protects only those rights peculiar to being a citizen of the
        federal government; it does not protect those rights which relate to
        State Citizenship. Id.
        Accordingly, it is not necessary that plaintiffs have non-resident
        status in order to bring a claim under the privileges and immunities clause of
        the Fourteenth Amendment.” [Jones
        v. Temmer, 829 F.Supp. 1226 (1993)]

        • Bill Ross

          My position is that our ancestors are DEAD and, have no force and effect in our affairs, except for their REAL intellectual accomplishments that you quote, should enough heed. However, central control of education, MSM and the long term forceful application of unequally applied carrots / sticks in service of injustice AKA unfairness (those who DO the actions are self-decreed NOT responsible for the consequences), different rules for different folks (managed chaos) is where we are at. Most people have been Pavlov conditioned to slavery / lobotomized.

          And, as you, I and many judges KNOW, for a fact that there are hordes of entitled willing and able to smite ANY who challenge their entitlements (AKA human rights) and addictions to “something from nothing” (the near extinct productive).

          This is the social / economic trap we have been tricked into. I have challenged these issues before many judges and, my demand to “be treated equally, in terms of measurable rights and responsibilities”, by law, as demanded by the “rule of law” has evoked terror in the eyes of both corrupt (determined to remain master predator) and honest (their entire profession and power hierarchy will smite them) judges.

          The courts and law hold NO ANSWERS that will be respected. They have been outflanked, outmaneuvered and neutered, in a trap of vast resources arrayed against any dissenters because “crime has paid”

          Study the law all you want, but, it has, for all intents and purposes become “just a goddamn mountain of useless paper”

          There was and remains a simple, basic “solution”, but, it will not be respected until ALL are at the edge of survival, risking extinction, and, that is if we are lucky:

          • Jim

            Yes Bill. I will agree with you and be more blunt. We cannot ever trust a Banker, a Politician or a lawyer. However I disagree with you on one point. We are the posterity of the “Founding Fathers” so we inherited their sovereignty (collectively). The Politicians are arrogant, self serving psychopaths, the bankers are determined to rule the entire world and the Lawyers do the dirty work for the bankers and the Politicians.

            I have been at this research for thirty years, have networked with other competent researchers. At first there were just a few of us but over the years we have seen more and more people who are waking up to the fact that there is something drastically wrong in America. When these people finally learn that they must group together and confront their Employees (Representatives & Senators) and deliver an ultimatum of “Answer the question correctly or be replaced” then you will see a tremendous change in government.

            Congress is authorized to pass laws according to the Articles of the Constitution. If a law has authority over the American people then there has to be an Article that authorizes it.

            Write and ask your Representative and Senator which Article of the Constitution authorized them to pass the Patriot Act or to create the Office of Homeland Security. Demand a correct answer and if an answer is not forthcoming stert looking for his or her replacement. We need to be very serious about these issues. What authority does the BATFE have in the Several States of the Union and where does that Authority emenate from?

            To start with READ the Constitution for the United States of America. Complaining and making excuses does not solve the problem. there are a heck of lot more of us than there are of them.

            We must have a rule of law which is followed exactly because without law that applies to everyone, Government People as well as American Citizens then America will end up in chaos. President Kennedy said it best.

            “Those who make peaceful revolution impossible will make violent revolution inevitable.”
            – John F. Kennedy

            Violent revolution in America is something we need to avoid but it may be necessary in order to save America.

            We must stay the course of peaceful correction to a wayward government.

            The Fedral Reserve System of ‘debt based economics’ needs to be destroyed. It is the catalyst for tyranny not only in America but in the entire world. Other countries are waking up to these evil banking schemes that enslave everyone and the the dark cape of truth is beginning to lift and let in the light.

            My prayer is that we can get it done before I die so I can feel asured that my children and grand children will not live in absolute slavery.

            Sorry Bill I failed to read your article on Natzi sychopaths first. It is an excellent article and well written. there is a legal term known as ” Ipsi dixit” which means ‘simply because he said so’. When judges state that they are the law it is ipsi dixit, and without authority. Having said that I am sure that you are aware of the two different court systems that exist in our government. there is the “district court of the United States” which is a true Court in Law (common Law court).Then there is the United States District Court which is an administrative Court for all of the Territories and Possessions of the United States created under the authority of Article IV, § 3, cl 2, of the Constitution.

            See BALZAC v. PEOPLE OF PORTO RICO, 258 U.S. 298 (1922) & MOOKINI v. UNITED STATES, 303 U.S. 201 (1938). these cases explain the difference in the two courts.

          • Ah, your monetary solution is to give monopoly printing power to the government alone. Competent monetary bureaucrats under the watchful eye of “the people” will create a monetary Nirvana. And how much money will they know how to print?

          • Jim

            Don’t know if you were responding to me but if so, —- you lost me because I never mentioned any such thing. The Federal Reserve Bank is a private Bank System which creates debt for the American People. Ellen Brown of “Public Banking” has a “Possible Solution” but I am not sure if that system is fool proof. Gold and Silver is another solution but that can also be manipulated. Where the answer lies I admit I don’t know but we cannot borrow our way out of debt.

          • Bill Ross

            There is NO “Possible Solution” with “rule of man”. There must be natural and “rule of law”, constraints because absolute power corrupts, absolutely and GREED (desire to consume more than is produced) is infinite.

            Have you mentioned “public banking” before? DB has “files” and, a very good memory to keep flip / flop manipulators, sophists and trolls “to account”

          • We don’t disagree with debt money so long as it is a COMPETITIVE process and there are marketplace choices. The best currency/money will win out in such a situation. Probably gold, silver plus free-banking of some sort …

          • Jim

            Yes, “competition” is good because it creates a better product at a cheaper price. Unfortunately there are those in the Banking Industry who will not tollerate “competition.” This is one of the issues with Iran, who does not believe in ‘usury’ and it was one of the catalysts that prompted the invasion of Lybia.

            My motto is that Credit Kills and Debt Destroys. However in order for the World to operate in a civilized manner a certain amount of debt is required. For the general public there is a need for debt, or credit if you will, in order to obtain high dollar items such as Housing and Vehicles. Society has become so complex that we (the entire world) need to operate on a certain amount of debt. How we go about doing this and not drown ourselves in the debt will depend on the terms of the loans.

            Is it possible to limit and control the terms that are reasonable? That depends on whether we all can agree on this issue.

            This problem goes back several thousand years, and as most of us know that the only time Jesus Christ lost his temper was when he threw the “money changers” and “Scribes” i.e. the Bankers and Lawyers out of the Temple. Has anything really changed since that time? Apparently not.

            If you have a solution I would be most happy to hear what it is. Personally I believe the biggest problem we have in this world is the people themselves. There is, for the most part, a lack of critical thinking and discipline among the general population. It took me several years to convince my wife to make a list of things to buy when she went shopping and to stick to the list. Also to ask herself two questions before she bought something. Do I really need this (necessity) of do I just want it (emotional)?

            I hope you have a solutionn for this problem because the borrower is slave to the lender and right now we are all slaves to debt in one way or another.

            Most people do not understand what ‘inflation’ is and what causes it. there are two types of inflation. One which is true inflation is simply supply and demand. the other is a devaluation of the dollar due to there being excessive dollars in the economy which is a false inflation. Certain people become exceedingly wealthy by using false inflation as a tool to gain wealth and keep the masses in debt.

          • 45clive

            Non-debt money would still be best. If you want something, save for it and combine with others who have savings if more capital is required. Divvying up profits and losses is not the same as debt slavery. Borrowing money should be the exception rather than the rule.

          • Bill Ross

            I’m not an American, nor, even a “fan” of the illusion, but “predator control” is in all of our interests, even for predators, who do not even have the wit not to crap on their chosen food (us).

            And, as I have oft stated / proven, the basic natural rights of slaves are more than sufficient (have, for all of history) to ultimately deal with THEM. Keep P=1:


            give THEM zero choice but to do something useful and productive, or die by their own hand. That, “is just”, choosing their own fate.

      • 45clive

        I am afraid many if not most people will only develop a conception of the Constitution if they read about it on Facebook or see it on YouTube. Then there are those who have such a short attention span that only Tweets will do.

    • davidnrobyn

      Good points in your essay; however, I can JUST PICTURE some Senator really changing his mind re his extra-Constitutional activities because of the arguments you pose. You can’t teach a pig to sing; you only waste your time and annoy the pig.

      • Jim

        davidnrobin – Thanks, but the Congress wears two hats. One for the several American States of the Union of States and the other for all of the Territories and Possessions of the “United States.”

        There are no extra-constitutional activities. Laws for Puerto Rico and all of the other Island possessions and Territories which the United States, i.e. the federal government, is baby setting for the Several States of the Union of States eminate from Article I, § 8, cl. 17 — and — Article IV, § 3, cl. 2 of the constitution FOR the United States OF America.

        Article I, § 8. Cl. 17., of the Constitution FOR the United States OF America.
        “Congress shall have Power … to exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten miles square) as may, … ,become the seat of the government of the United States, and…”

        Article IV. Section. 3. cl.1 New States may be admitted by the Congress into this Union; but no new State shall
        be formed or erected within the Jurisdiction of any other State; nor any State be formed by the Junction of two or more States, or Parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress.

        cl. 2. The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States; and nothing in this Constitution shall be so construed as to Prejudice any Claims of the United States, or of any particular State.

        The laws of I, 8, 17 and IV, 3, 2 have nothing to do with the fifty States of the Union of States unless you volunteer to become a “federal” United States citizen.

        The American People must keep one thing in mind.

        The American People make the Law. They do it through their Representative & Senator.

        The whole purpose of The Congress is to have an orderly system for the American People to communicate with one another and either agree or disagree with each other on certain limited issues.

        Therefore when the Congress passes a law it is in fact the American People who are passing the law.

        The American People got together and created the Congress system, which allowed the American People to govern themselves. The Congress is not the supreme Power. We the People are the Supreme Power.

        The Congress is simply a tool that We the People use to run the American, federal style, of government in an orderly and just fashon.

        “There is no such thing as a power of inherent Sovereignty in the government of the United States. In this country sovereignty resides in the People, and Congress can exercise no power which they have not, by their Constitution entrusted to it; All else is withheld.”
— Julliard v. Greenman, 110 U.S. 421 (1884)

        “Sovereignty itself is, of course, not subject to the law for it is the author and source of law.” 
— Yick Wo v.
        Hopkins, 118 U.S. 356 (1886)

        We the People are the Creators of Government, therefore We the People are the Sovereign!

        Therefore We the People are the BOSS, the EMPLOYER. All government employees, either hired or elected are the “EMPLOYEES.”

        We the AMERICAN people are the LEADERS, all government personnel are the followers and the servants of WE THE PEOPLE. They work for US!

        It is critical to understand this concept.

        Any law that is passed by the Congress and signed into law by the President is in fact a Mandate of We the People.

        It is the responsibility of the President to insure that the Laws are adhered to. This is so regarding the internal workings of the United States i.e. the federal government of those few laws which affect the several 50 States party to the agreement known as the United States of America.

        However if you do not involve yourself in the political process when, in fact, you have every right to do so and actually you have a responsibility and a duty to do so then you have no right to complain or criticize what the Congress has done.

        The price of apathy towards public affairs is to be ruled by evil men: Plato

        There has always been ‘evil’ people in the world. Plato was born about 425 years (exact date unknown) before Jesus Christ. There were ‘evil’ men in his world and the ‘evil’ men exist to day in our world.

        “It is not the function of our government to keep the citizen from falling into error; it is the function of the citizen to keep the government from falling into error.” — U.S. Supreme Court in American Communications Association v. Douds 339 U.S. 382, 442 (1950)

        You can’t solve any problem by complaining. You solve problems by taking action!

        Now that we understand that, lets look at a law that “We the People” allowed the Congress to Pass.

        The United
        States Code is made up of 51 Titles. Each Title deals with different issues but nthere is overlap between titles.

        Title 4 USC is titled Flag and Seal,
        Seat of Government, and the States.

        Title 4 is
        made up of sections.
        Title 4 U.S. Code § 72 – Public offices; at seat of Government.

        All offices attached to the seat of government shall be exercised in the District of Columbia, and not elsewhere, except as otherwise expressly provided by law.

        It is the job of the President to insure that all federal offices & their agencies do not exceed their “expressly” delegated limits & authority. Failure of the President to fulfill the responsibilities of his office are grounds for his

        In order for a federal Office or agency of any Office to operate outside of the District of Columbia there needs to be a law which is passed by the Congress (We the People) permitting them to do so, or ordering them to do so. If there is no delegation of law by the Congress then any Office or agency thereof who operates outside its authority is “outlaw” and acting under “Color of Law” which is a crime.

        If an “Office” or an agent of that Office enforces law beyond the bounds of their Authority then they are acting under “Color of Law.”

        A Florida Highway Patrolman cannot enforce Florida Law in Georgia. The Internal Revenue Service cannot enforce federal tax laws outside of the District of Columbia without an “expressly” delegated law of the Congress (We the People) authorizing them to do so.

        There are some serious misconceptions, among the American People, about how the U.S. Government is set up.

        First of all the President does NOT make law. He cannot even propose a law to the Congress.

        Second the President is the President of the United States of America. He is NOT the President of America.

        “The United States of America” is an association of (now) 50 Independent Nation/States, also known as ‘Countries.’

        Alaska & Hawaii are not IN America but they are in the cooperative agreement of association with the American Nation/States.

        America is a land mass which contains 48 Nation/ States and a ‘District.’ The ‘District’ i.e. the District of Columbia is the servants quarters in regards to the 50 States who have agreed to cooperate with each other regarding certain “very limited issues.”

        The word
        “of” means belonging to. Here is a statement from a Supreme Court case back in 1907. The case was about a labor dispute over work done in Boston Harbor in Massachusetts. Ellis v. United States, 206 U.S. 246; 27 S.Ct. 600 (1907)

        “An act which may be constitutional upon its face, or as applied to certain conditions, may yet bem found to be unconstitutional when sought to be applied in a particular case.”
 The works of dredging in Chelsea Creek, in Boston harbor as shown on the record, is not part of the “public works of the United States” within the meaning of the statute in question.”
 “It is unnecessary to lay special stress on the title to the soil in which the channels were dug, but it may be noticed that it was not in the United States. The language of the act is “public works of the United States.” As the works are things upon which the labor is expended, the most natural meaning
        of “of the United States” is “belonging to the United States.” Ellis v. United States, 206 U.S. 246; 27
        S.Ct. 600 (1907)

        Two things to be noted in the above statement. The Court stated that Boston Harbor (the title to the soil) was not in the United States. Then it went on to state that the word “of” means, “belonging to.”

        Therefore “the United States of America” belongs to America. It is the property of the American Nation/States. The American Nation/States belongs to We the People!

        None of the American Nation/States are in the United States, they are in America.

        FEDERAL, government. This term is commonly used to express a league or compact between two or more states.

        2. In America the central government of the Union is federal. The constitution was adopted “to form a more perfect union” among the states, for the purpose of self-protection and for the promotion of their mutual happiness.

        The location of “United States”, as defined by law, further confirms that the authority of the Secretary is restricted to “the District of Columbia, and not elsewhere.” The Uniform Commercial Code at § 9-307(h) states:
        The United States is located in the District of Columbia.”

  • Charlie Primero

    The U.S. Internal Revenue Service maintains an office in Puerto Rico. IRS-CID Agents carry guns. ‘Nuff said.

    IRS Office
    City View Plaza II Bldg.
    48 Carr 165 km.1.2
    Guaynabo, Puerto Rico 00968-8000
    (787) 522-8660

  • Bill Ross

    Things / rules do not remain constant. If someone gains influence and smells a renege profit, well, this is what got us here in the first place, “broken” (fraudulent) political / legal “promises”. How’s everyone dong with “Change you can believe in”?

    There is nowhere to run, nowhere to hide. In the end, to have any chance of survival, we must all stand our ground and protect us and ours from predators. In the current moral / legal environment, many “escape routes” are frauds, bait and switch, just to trap you and your resources in a place (non citizenship) very difficult to defend.

    And, banks are “thick as thieves”. They will sell you out in a moment, if threatened, or even asked (implicit threat). Their survival, like all of ours, depends on what “power tolerates them to DO”, as opposed to a mutually beneficial honest trade / inviolate contract.


    So, does this mean that, when I am ready to crack open my IRAs, 401Ks etc, I can move to Puerto Rico and pay no tax on all those deferred gains when I make withdrawals?

  • davidnrobyn

    There’s a reason Puerto Ricans have consistently voted “no” on every question of statehood–they already have all the benefits and few if any of the disadvantages of being part of the US. I hope they continue to walk the narrow line. For their benefit and ours.

  • Mises View: “Wage Earners and Employers” Ludwig von Mises

    May 21, 2014 Ludwig von Mises was asked to respond to the question: “Are the interests of the American wage earners in conflict with those of their employers, or are the two in agreement?” This recording is made available through the generosity of Bettina Bien Greaves, and was originally recorded on 10 May 1962 and aired on 17 May 1962 during the intermission of the U.S. Steel Concert Hour.

  • Joelg

    Puerto Rico has been offering these deals for decades. Big pharma once used it for manufacturing in a bigger way (ran into quality control problems). I think even Major League baseball had their baseballs made there. An old story much in need of a “longtime observer” of the island to put it into perspective. Why St. Kitts-Nevis is being punished still has not been explained to my satisfaction; many other countries, including Canada and New Zealand have long offered preferential paths to citizenship for those investing money. So there has got to be more to the St. Kitts-Nevis story that is not being told.

    I doubt your average Hispanic person gives a damn one way or the other, and in any case the vote would not switch to the GOP over Puerto Rican business tax rates. Hedge funds already have a favorable income tax rate in the USA, because Harry Reid knows that they would otherwise leave the USA (and outside the USA could not contribute political money to the parties and Senate campaigns, much less to the IRS). Reid has been pretty open and in the public record in his support of the mining industry and at least provisionally on the hedge fund industry.

    What y’all miss is that barriers to exit act as barriers to entry. The Berlin Wall may have been designed to keep people in, but you can bet it did an even better job of keeping out talent and investment. I mean, who would want to get trapped in behind the Wall? Similarly, the USA regulatory wall registers like the Berlin Wall to investors and talent living outside the USA.

    Indeed, India owes much of its success in high-tech companies to USA barriers that prevented graduate students from India from staying in the USA and “forced” them back to India. Now, with input from consultants like Marcus Wolfe (former head of East German Stasi) and top Soviet Politburo officials and generals, the USA has replicated that system of Ironclad Control. Those with talent and money to invest do not need a physical Berlin Wall to tell them to stay out of the USA; bureaucratic and regulatory walls plus drone attacks suffice to get across the message to take your stinkin’ money and talent and create jobs and prosperity someplace else because the USA Police State is a hostile place that can turn against you on a dime.

    In other words, from the standpoint of “new” money outside the USA, it would be best to invest that money and start the business or company outside the USA. Similarly, USA-based companies doing due diligence will not jeopardize their continued existence by enlarging their USA footprint when politicians are leading rallying cries for asset seizures, higher taxes and persecution. The old writing on the wall story. The USA has designed a system to keep talent and investment out. Perhaps Harry Reid’s party has also calculated that their voter base benefits more by bringing in the illegal immigrants for welfare benefits. Puerto Rico is probably no more than a temporary safety valve to keep the hedge funds from relocating until they can devise a way to capture their assets more effectively.

    A brilliantly designed plan to collapse the USA economy, quite apart from the FED and central banks. Give USA.GOV credit for their actions. The only real question is why those running the show (assuming this is not an autonomous leaderless government) prefer a Police State and a Collapsed USA Economy rather than a Truly Prosperous State with Full Freedom where money can enter and exit at will with Minimal Barriers.

    • 45clive

      My take is that the globalist bankers have enticed a hit man, the neo-conservative Zionists now running the US, to take out the rest of the world. The Neo-Cons either don’t see or don’t care that those same bankers have saved a bullet for them. The most expedient way to end this lose-lose game is for real Americans to take back their country from the Neo-Cons, kill the Federal Reserve, the security state and the globalist bankers and their enablers, now that we know who they are and what their game is.

  • An interview with Peter Schiff on his move to Puerto Rico.

  • Ned Carbine

    Well, since the IRS is homeported in PR, I guess this is a good deal for the Obama Cartel.