US fleet on it's way to Costa Rica

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RF
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Re: US fleet on it's way to Costa Rica

Postby RF » Wed Oct 13, 2010 6:35 pm

lwd wrote: Note it looks to me like most citizens of Puerto Rico may not have to pay federal income tax.


Thanks for posting this article.

However I am a little puzzled at the quoted sentence as the article does say that citizens are liable for Federal Income Tax, as well as local payroll tax. This presumably is on the basis of being US citizens, but the right to vote in Federal Elections is excluded by non-residence in any of the fifty states or the District of Columbia; those citizens who have state residency can vote for the President in that state.
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Re: US fleet on it's way to Costa Rica

Postby lwd » Wed Oct 13, 2010 7:00 pm

It's not the clearest wording but here is the quote:
Individuals working with the Federal Government pay federal income taxes while the rest of the residents are required to pay federal payroll taxes (Social Security[83] and Medicare),[84] as well as Commonwealth of Puerto Rico income taxes. All federal employees,[85] plus those who do business with the federal government,[86] in addition to Puerto Rico-based corporations that intend to send funds to the U.S.,[87] and some others[88] also pay federal income taxes.

Note that it makes a distinction between income taxes and payroll taxes. Federal employees, corporations that do business with the rds, and corporations that send fund to the US, and some others pay income tax (this varies between about 10% and 30% of income) the others pay Social security and Medicare (the payroll taxes) these are much less and allow you the benefits of Social Security and Medicare when you are old enough. Note that the business can decrease their tax liability by spinning off subsidary companies devoted to dealing with the feds and/or the states.

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Re: US fleet on it's way to Costa Rica

Postby RF » Thu Oct 14, 2010 1:22 pm

I was looking at a different sentence than that in the quote above - the article does eleswhere refer to the status of Puerto Rico as defined under Federal Law Title 48 Chapter 4, where it says 'Puerto Rico residents are required to pay US federal taxes''
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Re: US fleet on it's way to Costa Rica

Postby lwd » Thu Oct 14, 2010 1:29 pm

I saw that too but it's not clear if "federal income tax" is included in "federal taxes". The article presents a good overview but that section is rather murky as to the details.

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Re: US fleet on it's way to Costa Rica

Postby RF » Thu Oct 14, 2010 6:02 pm

I'm not a particular expert on the USA taxation regime, but for most countries taxes on income are generally the most important taxes in terms of revenue raising. Thinking along those lines I would assume the phrase ''federal taxes'' must embrace ''federal income tax'' as a matter of principle.

There was a similar issue here in Britain in the early 1950's concerning the Isles of Scilly. These tiny islands are some 28 miles off Lands End in Cornwall, and virtually all the land there is owned by the Crown (that is the institution of the British Monarchy, but not the Queen personally). Because the Isles of Scilly were not part of the county of Cornwall technically they were not part of England, and as such somebody tried to argue in court that the British Inland Revenue had no jurisdiction to raise income tax from Isles of Scilly residents. The court seemed to agree, but before they came out with a judgement Parliament changed the law to say that the Inland Revenue had full jurisdiction, so end of argument.
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Re: US fleet on it's way to Costa Rica

Postby lwd » Mon Oct 18, 2010 4:07 pm

Well at one point in time an income tax was unconstituional in the US. The Sixteenth ammendment was necessary for it to be enacted so it may be considered distinct for historical reasons.

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Re: US fleet on it's way to Costa Rica

Postby RF » Mon Oct 18, 2010 6:02 pm

British income tax incidently was also considered immoral and was introduced on a temporary basis by Parliament to pay for the Naploenic Wars. It is still with us today - levied by Parliament each year on a temporary basis until the end of the current tax year the following 5th day of April.
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Re: US fleet on it's way to Costa Rica

Postby lwd » Tue Oct 19, 2010 1:10 pm

That may be the source of it's unconstitutionality early in the days of the repbulic. Tax issues were major factors in the US revolution and the time period matches up pretty well. We have wondered pretty far affield from the topic though haven't we. :D

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Re: US fleet on it's way to Costa Rica

Postby RF » Tue Oct 19, 2010 1:30 pm

We sure have, but at least any US fleet heading for Costa Rica will of course be well funded by the US taxpayers, including any in Puerto Rico...
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