Originally posted by Hudson:
Puerto Rican taxation is a federal tax equivalent to the IRS taxation system. It is not a state or local tax. If it was, then it would base its taxable income on the federal return first. And if one pays to both the Puerto Rican tax authority and to the IRS, one could qualify for the foreign tax credit on their IRS federal return. It was not that obvious to you if you state it is a state or local taxation.
Puerto Ricans, generally, have enjoyed being a commonwealth. Puerto Ricans who want to become a state or who want to become independent are in the minority. However, either becoming an independent nation or a state does have some disadvantages to Puerto Rico and the surrounding regino.
Puerto Rican taxation is a federal tax equivalent to the IRS taxation system. It is not a state or local tax. If it was, then it would base its taxable income on the federal return first. And if one pays to both the Puerto Rican tax authority and to the IRS, one could qualify for the foreign tax credit on their IRS federal return. It was not that obvious to you if you state it is a state or local taxation.
Puerto Ricans, generally, have enjoyed being a commonwealth. Puerto Ricans who want to become a state or who want to become independent are in the minority. However, either becoming an independent nation or a state does have some disadvantages to Puerto Rico and the surrounding regino.
Thus, any equivalent tax that they pay should be compared to state and local level. Granted, their own tax rate is higer than any state government in US charges. However, the bottom line is, when all things said and done, thanks to their federal income tax exemption, they pay much lower total amount than US residents do.
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