by David Noll, Associate Editor
The people of Puerto Rico have, for the first time ever, voted in favor of statehood in the United States. While all 50 states have citizen petitions to secede from the Union, Puerto Rico has chosen to enter our Union. Puerto Ricans voted against statehood twice in the Clinton administration, a time when a booming U.S. economy would have made statehood very beneficial. The vote for statehood now, in a weak U.S. economy, signals two big changes in Puerto Rico and the U.S.
The general expectation would be that Puerto Rico would want to keep its commonwealth status in weak economic times. In strong economic times Puerto Rico benefits from massive U.S. tourism and the easier it is for people to travel there the better for tourism. In an economic slowdown, the lower tax rate that can be sustained in a protectorate (especially for the gambling industry) is more important to keep vacations to Puerto Rico cheap. But this would suggest Puerto Ricans should have voted against statehood in the November elections. Continue reading