Representative Richard E. Neal
300 State St., #200
Springfield, MA 01105

Dear Representative Neal,

As your constituents, we are highly concerned about the effects Act 22 (now part of Act 60) is having on Puerto Ricans, and we urge you to close the Act 22 tax loophole. Congress can eliminate this loophole, which allows millionaires to avoid paying virtually no federal or local taxes – a lose-lose situation for both states and Puerto Rico.

More than 54,141 call Springfield, Massachusetts home and they are not disconnected from the issues that affect their loved ones on the Island. The tax break provided by Act 22 is leading wealthy individuals to move to Puerto Rico and buy properties at staggering prices in middle- and low-income communities throughout the Island. This results in higher housing prices displacing Puerto Ricans from their communities, since the average Puerto Rican only has 60% of the disposable income needed to buy a home. In fact, average rent prices have skyrocketed by 600% since 2017. In one case in Rio Piedras, the moderate-income tenants of a building purchased by an Act 22 beneficiary were given two weeks notice to leave.

Act 22 is also reducing tax revenue collections at the federal level as well as for state and local governments. Wealthy Americans are moving to the Island to take advantage of this break and openly brag about not having to pay taxes in the states they are from. This tax abscondence makes it harder for us to fund schools, roads, hospitals, and other essential services stateside.

Act 22 has created a vicious cycle that helps the rich evade taxes while providing little benefit and much harm for both Puerto Ricans and stateside communities. Puerto Rico is the only place in the world where U.S. passport holders can move to and avoid paying taxes to the federal government while not losing their citizenship. If U.S. citizens move to France, they still have to pay taxes to both the United States and France. Under Act 22, Americans moving to Puerto Rico don’t have to pay U.S. or most Puerto Rican taxes that existing residents do. By closing this tax loophole, Congress would ensure that federal tax exemption only applies to Puerto Ricans instead of outside tax evaders looking to game the system – 100 of whom are already being investigated by the IRS.

For the well-being of the people of Puerto Rico and our state, we ask you to apply Section 933 of the Internal Revenue Code only to individuals born in Puerto Rico and their descendants and individuals naturalized on the Island. Doing so would help counteract the egregious and detrimental effects that Act 22 has caused in Puerto Rico and the United States.

We look forward to hearing from you and working with you on closing this tax loophole.

Sincerely,