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A few weeks ago, Alberto Baco Bague arrived in New York for a roadshow of sorts. In just 48 hours, Baco, Puerto Rico's secretary of economic development and commerce, met with more than 30 hedge fund managers, investors and others who could be classified as very well-off.
His mission might seem quixotic at best: trying to convince these well-heeled New Yorkers to uproot themselves from Manhattan and relocate to Puerto Rico. But he says they are starting to come.
For Baco and the Puerto Rican government, the benefits of injecting more rich people into the island are clear. "We are a poor island, and this is our way of developing [and] developing employment in Puerto Rico. We are very serious about that," he says.
Baco has an enticing carrot for the investors. Under laws enacted in 2012, when someone moves to the island, all of that person's investment income, like capital gains, dividends and the like — is completely tax-free. Plus, service income — say, a hedge fund's management fees, is taxed at just 4 percent. And, as it is for all Puerto Rico residents, there's no federal income tax.