Representative Nydia Velázquez from New York is pushing for changes that would stop crypto investors from using Puerto Rico to avoid federal taxes.
She introduced the Fair Taxation of Digital Assets in Puerto Rico Act on April 21.
The bill would make changes to the island’s tax code so that income from cryptocurrencies would no longer be fully exempt from US taxes.
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The proposal would also require certain investors to pay both local and federal taxes on capital gains. “Instead, it’s driven up housing costs, pushed out local residents, and added pressure to an island where nearly 40% of people live in poverty — all while costing the federal government billions in lost tax revenue,” she told Bloomberg.
Puerto Rico has been a popular spot for crypto investors since tax breaks were introduced in 2012 under Acts 20 and 22, which were later merged into Act 60. These laws allow people who move to the island and meet certain rules to pay little or no tax on their investment income.
According to Velázquez’s office, the federal government could lose around $4.5 billion in tax revenue between 2020 and 2026 due to these laws.
While critics argue the system helps the wealthy at the expense of locals, others believe the incentives attract outside money and create business opportunities.
New York Assemblymember Clyde Vanel recently introduced Assembly Bill A7716. What does the bill propose? Read the full story.
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