Paulson's Puerto Rico Paradise Lures Rich Fleeing Taxes

By Katherine Burton
Bloomberg
Jun. 27, 2014

Related: Puerto Rico To Become Epic Tax Haven For U.S. Citizens?: 'The Idea Is To Turn It Into An Alternative To Singapore'It’s 2 a.m. at La Factoria in Puerto Rico’s Old San Juan, a hipster joint with a sagging couch, tile floors and Christmas lights that wouldn’t be out of place in Brooklyn’s Williamsburg. While “Get Lucky” plays, tipsy couples slink out the doors onto the colonial city’s cobblestone streets into this warm April night.

At the bar, a 28-year-old hedge fund trader -- the type of person who posts his SAT results on his LinkedIn page -- is ranting about the tax code. He’s obsessed with it, complaining that the U.S. is the only major country taxing citizens on their worldwide income, no matter where they reside. That’s why he moved here.

Struggling to emerge from an almost decade-long economic slump, the Puerto Rican government signed a law in early 2012 that creates a tax haven for U.S. citizens. If they live on the island for at least 183 days a year, they pay minimal or no taxes, and unlike Singapore or Bermuda, Americans don’t have to turn in their passports. About 200 traders, private-equity moguls and entrepreneurs have already moved or committed to moving, according to Puerto Rico’s Department of Economic Development and Commerce, and billionaire John Paulson is spearheading a drive to entice others to join them.

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